Tag Archives: Form D

Regulation D Annual & Interim Amendments

Form D Updating Requirements

Initial Filing Requirement

As discussed in our overview of Regulation D, hedge funds must file a Form D with the SEC within 15 days of the first subscription of hedge fund interests.  This filing is now done completely online through the SEC’s EDGAR filing system.  If you have any questions on your initial Form D filing requirements, please contact Cole-Frieman & Mallon LLP.

Annual Amendment Required

Hedge funds which are continuously offering their interests are required to file an amended electronic Form D on an annual basis (e.g. on or before the anniversary of the most recent amendment (or original filing)).  Real estate funds and private equity funds which have made a “final closing” will not be required to file an annual amendment unless one year lapses from the first sale date and the final closing date.  See generally Rule 503(a)(3)(iii).

Requirement to Correct Errors or Report Changes

Hedge funds must file amendments to Form D to correct material mistakes of fact or errors, and to report changes in information reported on previous Form D filings.  The amendment must be filed as soon as practicable.

Generally changes will require an amendment except for certain more administrative changes.  The changes which do not require instant amendment include:

  • The address or relationship to the issuer of a related person identified in Item 3 of Form D;
  • The fund’s revenues or aggregate net asset value;
  • The minimum investment amount, if the change is an increase, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in a decrease of more than 10%;
  • Any address or state(s) of solicitation shown in response to Item 12 of Form D;
  • The total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than 10%;
  • The amount of interests/securities sold in the offering or the amount remaining to be sold;
  • The number of non-accredited investors who have invested in the offering, as long as the change does not increase the number to more than 35;
  • The total number of investors who have invested in the offering; or
  • The amount of sales commissions, finders’ fees or use of proceeds for payments to executive officers, directors or promoters, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than 10%.

The only time that changes to these items must be reported on an interim basis is when the issuer is otherwise filing a 503(a) amendment.

Rule 503(a)(4) requires that current information must be provided in response to all parts of the Form D, regardless of the reason for the filing.  Thus, even when filing an amendment to correct a small error, current information must be given for all parts of the form, even those items excepted under 503(a)(3)(ii).  Similarly, when filing to report changes in information that is not under the exception, current information must be provided for all parts of the Form D.  And, of course, when making an annual filing, all information must be current.


Please contact us if you have a question on this issue or if you would like to start a hedge fund.  Other related hedge fund law articles include:

Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs the Hedge Fund Law Blog.  He can be reached directly at 415-868-5345.

Alabama Hedge Fund Law – Regulation D Filings

In our continuing effort to expand our hedge fund law resources on this blog, we will be posting statutes and other legal resources from each of the states.  Because each state has different laws and enforces those laws differently, hedge fund lawyers often discuss state specific hedge fund issues with the securities division prior to providing advice to clients.  The post below provides information on Alabama’s regulation D requirements.  Please contact us if you would like to establish an Alabama hedge fund or have questions on Alabama investment advisory issues. Continue reading

Overview of New Form D for Hedge Funds

As we noted in a previous post about filing Form D online, Form D has been changed and I believe that the new Form D is a great improvement and is more appropriate for hedge fund offerings.  As we’ve noted before, many of the securities laws were drafted in the 1930s and 1940s and have not been overhauled to accommodate the current practices within the securities industry.  With the new Form D, we see a giant step forward and commend the SEC on producing a form which asks questions which are appropriate for both operating businesses and hedge funds.

The new Form D is cleaner and easier to read.  There is plenty of space for explanations if a hedge fund’s structure does not exactly fit the parameters of a specific question.  The new Form D also has great instructions on how to complete the various items.

Please note that hedge fund managers should have a hedge fund lawyer or compliance person complete and submit Form D on their behalf.  The SEC expects that each Form D will take approximately 4 hours to complete.  Please click to view a copy of the new Form D .

Items by Item run through of the new Form D is below:

Item 1. Issuer’s Identity – background information on the issuer including name, entity type, year of organization.

Item 2. Principal Place of Business and Contact Information

Item 3. Related Persons – should include the hedge fund manager;  additionally there is a continuation page where the manager will include key members of the management entity.

Item 4. Industry Group – there is a specific box for hedge or other investment funds.  This is a significant improvement over the old Form D which did not include anything like this.

Item 5. Issuer Size – hedge funds will now provide an aggregate net asset value range, which is a more appropriate inquiry.

Item 6. Federal Exemptions and Exclusions Claimed – here most hedge funds will check at least a couple of boxes, your attorney or compliance professional will be able to help you with this.

Item 7. Type of Filing – you will provide information on whether this is a new filing or an amendment to a previous filing.  The instructions to the Form D provide a list of times when it is necessary to file an amendment.

Item 8. Duration of Offering – generally hedge fund interests are offered on a continual bases and the hedge fund will accordingly indicate that the offering will last greater than one year.

Item 9. Type(s) of Securities Offered – the hedge fund will typically check two boxes here.

Item 10. Business Combination Transaction

Item 11. Minimum Investment – old Form D also required this information

Item 12. Sales Compensation – if a hedge fund uses a broker or a third party marketer to raise money then the hedge fund will need to provide certain information on the broker or third party marketer.

Item 13. Offering and Sales Amounts – here hedge funds will typically check “Indefinite” where appropriate.

Item 14. Investors – the SEC requests information on whether there have been sales to persons who are not accredited investors (typically referred to as non-accredited investors)

Item 15.  Sales Commissions and Finders’ Fees Expenses – here the hedge fund will provide more information on the transactions discussed in Item 12.

Item 16. Use of Proceeds

Other related articles of interest:

What is a hedge fund?

In short, hedge funds are pooled investment vehicles. That is, a hedge fund is a company which pools money from its investors (owners) and makes investments pursuant to the fund’s stated investment objective. There are many different types of hedge funds, which can invest in everything from stocks and bonds to more esoteric investments like derivatives, commodities and real estate. In addition to investments in a wide variety of financial or other instruments, hedge funds can “short” certain financial instruments and can also borrow to “leverage” their investments.

Unlike mutual funds, hedge funds are not registered with the U.S. Securities and Exchange Commission. While this means that hedge funds are not subject to the same level of government scrutiny as mutual funds, it does not mean that the SEC and the states cannot bring enforcement actions against hedge fund managers who break the law or make misrepresentations to investors.

While hedge funds are not subject to the more rigorous standards of mutual funds, they will need to comply with the U.S. securities laws regarding “private placements.” Hedge funds are generally sold to investors in “private placements” which means that hedge fund managers cannot advertise and that, generally, investors will need to be “accredited investors” that is they must have either (i) a one million dollar net worth or (ii). The investment managers will also need to adhere to certain filings within each state in which an investor resides. This will generally mean that they must file a “Form D” notice with each state within 15 days of the date in which each investor invests in the fund. The “Form D” must also be filed with the SEC within this time period.

Filing Form D

While hedge funds are not generally “regulated,” they are subject to the requirements of the Securities Act of 1933 (and potentially Regulation D). Generally this will mean that each hedge fund will have to file a Form D with (1) the SEC and (2) each state in which the fund has an investor. Form D must be filed with the SEC within 15 days of the first sale to the investor, each state will have different requirements.

In addition to the Form D, each state will generally require the partnership to submit a Form U-2 and the payment of an administrative fee. These administrative fees can range from $75 to $500; a few states may charge more. (Note: the fund itself, not the management company, will typically pay for this expense.) These items will generally need to be submitted to each state within 15 days of the date of the first sale in each state (note: New York requires its Form 99 to be filed prior to a first subscription from a New York resident).

The firm which submits these filings on your behalf will typically need the following information for each subscription:

  • Residence of investor
  • Amount of subscription
  • Whether the investor is “accredited” or not

Question: hedge fund manager and registration

Question: I am a investment adviser registered in Texas and I want to start a hedge fund – do I have to register in each state which I have investors?

Answer: Generally no. If you are a Texas-registered investment adviser (note: to be distinguished from an SEC-registered investment adviser), and you have no place of business in another state, you will not have to register in any other states. However, please note that if you sell interests in your hedge fund, you will need to make sure you comply with all of the “blue sky” laws with regard to the state in which the interests are sold. This will generally entail making a Form D filing for states where the investor resides. Your law firm will be able to make this Form D filing for you on your behalf.