Tag Archives: hedge fund manager

Oregon Hedge Funds – Investment Advisor Issues

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Questions and Answers on Oregon Investment Advisor Registration For Hedge Funds

Some states will provide a good source of information to start up hedge fund managers which details whether the hedge fund manager will need to register as an investment adviser in the state of residence.  The following resource is from the Oregon Division of Finance and Corporate Securities and answers common questions that potential Oregon hedge fund managers would have regarding the Oregon investment advisor registration requirements.

Specifically this set of questions and answers shows us that there is no de minimis rule which would allow managers to escape investment advisor registration in Oregon; the Q&A also details the notice filing requirements in Oregon.  Even though SEC registered investment advisors will not need to register with the state securities division, the firm will need to “notice file” and pay a filing fee and investment advisor representatives of the firm will usually need to have the Series 65 and the investment advisory firm will need to pay a filing fee for the representative.  Continue reading →

Hedge Funds Blindsighted by Massive Ponzi Scheme

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According to a SEC release this morning (and every other financial news agency), major hedge funds, banks and other financial institutional were caught in a Ponzi scheme of epic proportions.  While it is hard to believe that such large groups were blindsighted by this, it does showcase the fact that fraud can happen to even sophisticated investors and that hedge fund due diligence (an ongoing due diligence) is absolutely required.  The SEC release is reprinted below. Continue reading →

Alabama Hedge Fund Law – Regulation D Filings

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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 →

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 →

Withdrawing from Investment Advisor Registration – the Form ADV-W

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For many different reasons a hedge fund manager will decide to de-register as an investment advisor.  The manager may no longer be required to be registered or a manager may have registered simply for marketing purposes and has found that it is too much of a hassle (and cost) to be registered.   In such instances a hedge fund manager can withdrawal from registration by filing Form ADV-W through the IARD (Investment Advisor Registration Depository) system.   The process for de-registering is substantially the same whether the manager is registered with the SEC or with the state securities commission.  This article will discuss (i) issues with de-registration for the hedge fund manager and (ii) detail the process of deregistering.  Continue reading →

Hedge Fund Service Providers Overview

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The hedge fund industry includes not only the hedge fund managers and the investors, but also the service providers that help the hedge fund and the manager with the day to day duties associated with running a hedge fund.

The industry has grown rapidly over the last decade and continues to develop at an ever rapid pace.  In the beginning there were hedge fund attorneys, prime brokers, hedge fund administrators, hedge fund auditors, but now we also have consultants, website designers, due diligence experts and compliance firms.  All of these businesses fall within the category of hedge fund service providers.  I’ve detailed the various roles of these businesses on other parts of this blog, but am producing this overview which should be especially helpful for start-up hedge funds. Continue reading →

Hedge fund advertising – Can a hedge fund manager run a blog?

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Blogs have become important tools in the investment management industry and have allowed even the most unsophisticated computer user (ahem….hedgefundlawblog….) to post useful thoughts and information for other industry participants to examine and opine upon.

Some hedge fund managers may want to use the internet and blogs to vet ideas or to discuss certain parts of their strategy, which begs the question whether such activities are legal under the federal (and state) securities laws.   As we see it, there are three central issues which a hedge fund manager must be aware of when deciding whether to blog: (i) the Regulation D rules prohibiting general solicitation, (ii) the “no holding out” requirement for investment advisor exemption, and (iii) the anti-fraud rules (no manipulation).  We will examine these issues in turn and then provide recommendations. Continue reading →

Hedge Fund Managers Look to Cut Costs – No Hedge Fund Audit?

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As hedge fund performance results are weak or negative, managers are becoming more interested in decreasing the costs that the management company bears directly as well as those costs which are borne by the fund. Continue reading →

Life Settlement Hedge Funds – Are Life Settlements Securities?

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Many life settlement hedge fund managers which establish life settlement hedge funds come from the insurance industry (although we have dealt with managers who are also registered as investment advisors).  Accordingly, many managers are surprised when we discuss the issue of potential investment advisory registration.  The central question is whether life settlements are securities.  Continue reading →

Life Settlement Hedge Funds – What is a Life Settlement?

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Over the past few years life settlements have become a more attractive investment opportunity and there is an increase in the amount of hedge funds which are being formed to invest in various life settlement strategies.  This article will discuss life settlements and will introduce some of the issues which hedge fund managers should discuss with their attorney if they want to start a life settlement hedge fund.

From Viaticals to Life Settlements and Premium Finance

Life Settlements are the younger sibling to the Viatical industry which was popular in the 1980’s with regard to AIDS patients (see SEC description of Viatical’s below).  A “life settlement” usually refers to a secondary market transaction on an insurance policy.  Typically an insured will sell its insurance policy to a third party (the investor) who will pay the insured more than the cash surrender value of the policy, but less than the death benefit.  The investor will then be liable for the premium payments and will receive the death benefit upon the death of the insured. Continue reading →