Tag Archives: state RIA

Massachusetts RIA Net Worth Reminder

Today we received an email reminder from the Massachusetts Securities Division with respect to investment adviser minimum financial requirements.  Essentially hedge fund managers registered as investment advisers with Massachusetts will either need to (i) post a $10,000 surety bond or (ii) establish a separate account with $10,000 and maintain a positve net worth.  Managers who choose to establish the separate account need to provide the Securities Division with a balance sheet on an annual basis.

The email stated:

Please see the attached reminder of the Division’s policy regarding minimum financial requirements for certain Massachusetts-based registered investment advisers.  Please call the Division if you have any questions.

The attachment stated:



The Massachusetts Securities Division (the “Division”) hereby provides this reminder to certain investment advisers described as follows:  those (1) who are required to be registered with the Division; and (2) whose principal place of business is in Massachusetts; and (3) who (i) exercise investment or brokerage discretion, (ii) have custody of clients’ funds or securities, or (iii) require the payment of more than $500 in advisory fees more than 6 months in advance.  The regulation found at 950 CMR 12.205(5) requires such investment advisers to either (a) post a $10,000 surety bond, or (b) establish a separate, segregated account of $5,000 [for (i) above] or $10,000 [for (ii) and/or (iii) above] and maintain at all times a positive net worth.  The Division requires that those investment advisers who choose option (b) demonstrate, on an annual basis, their positive net worth with a certified balance sheet prepared in accordance with generally accepted accounting principles applied on a consistent basis.  See 950 CMR 14.412(C).

If you are registered as an investment adviser in Massachusetts and have any questions, please feel free to contact us at Mallon P.C.


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Cole-Frieman & Mallon LLP provides comprehensive hedge fund start up and regulatory support for managers and registered investment advisers.  Bart Mallon, Esq. can be reached directly at 415-868-5345.