Tag Archives: hedge fund law

Wisconsin Based Hedge Funds – Wisconsin Investment Advisory Rules

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One of the key issues which hedge fund managers will need to determine early in the hedge fund formation process is whether the management company will need to be registered as an investment adviser with the state securities commission (or potentially with the SEC).  Generally the lawyer advising the management company will survey the state laws to determine whether or not registration is necessary.  While the lawyer will look directly to the state statutes through some sort of online legal database such as Lexis Nexis (to ensure that the most current and up to date information is provided to the client), the hedge fund manager can also check with his state securities commission to see if registration is required.  Sometimes states, such as Wisconsin, will include their registration information on their website.  The notice below is typical of such a practice. Continue reading →

New Hedge Fund Regulation: Guidance From Former SEC Commissioner Should be Followed

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In the conversations the hedge fund community will be having with Congress and the regulators in the coming months regarding increased regulation, we should look to shared answers to the issues which need to be addressed.  In this vein, I have been researching the speeches of prominent SEC personel.  I have just recently reviewed a speech by former Commissioner Paul Atkins regarding regulations and how regulations impact the investment management community.  Perhaps surprising to some, the former Commissioner showed reasonably thinking with regard to increased regulation.

The speech, reprinted in its entirety below, was given in the wake of the proposed adoption of two rule changes back in December of 2006.  The first proposed rule change was to amend the Investment Advisers Act so that it was clear that hedge fund managers had an anti-fraud duty to the investors in their hedge funds as well as the hedge funds themselves.  The second proposed rule was the “accredited natural person” rule which would effectively change the potential make up of hedge funds by requiring a different net worth threshold for investors in hedge funds.  There were a significant amount of comments to the proposed rules which stated that it would be a bad idea to raise the net worth requirements for hedge fund investors.  Neither of the proposed rules have been adopted and it is unlikely that they will be, at least in the near future.  Continue reading →

Authority of Various Securities Laws and Releases/ Interpretations

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The reference below comes directly from the SEC website and provides the reader with a good overview of the different laws and rules which govern the hedge fund industry, and the order in which those rules are applied (that is, the securities statutes trump SEC interpretive releases).  This reference is important for hedge fund managers to understand because there are many different types of authority which are cited in this blog and in the hedge fund offering documents and hedge fund compliance manuals.  If you have questions on what sources are the most important for your particular situation, you should discuss this with your hedge fund attorney.  As always feel free to contact us if you have legal questions regarding your hedge fund.  Continue reading →

Hedge Fund Law – Summary of Hedge Fund Laws and Regulations

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he following is a summary of the major laws which affect the hedge fund industry.  If you have any questions on how these laws impact hedge funds in general or your specific situation, please contact us.

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Securities Act of 1933 – the 1933 Act was enacted on May 27, 1933 as a reaction to the market crash of 1929. The overarching purpose of the act was to require that all “securities” be registered with the government (at the time the FTC). The Act provides some exemptions from this general requirement; for hedge fund managers, the most important exemption from registration is found in Section 4(2) which provides that securities will not need to be registered is they are sold in a transaction which does not involving any public offering. Continue reading →

Sovereign Wealth Funds (SWF) as Potential Hedge Fund Investors

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Hedge fund managers should be open to investments from all different types of investors including sovereign wealth funds or “SWFs.”  Sovereign Wealth Funds are government owned investment entitites.  Discussion of SWFs is usually with regard to many of the large oil producing countries, but a SWF can be established by any governmental entity including state entities (both Alaska and Texas have funds). Continue reading →