Starting a Hedge Fund

See these paragraphs from my prior posts:

Each state (with the exception of Wyoming) has created rules relating to Investment Adviser activities. Some of those state rules will take precedence over the federal rules. For example, in Texas and California (and many other states), if you have a business presence in the state and have a single client that is compensating you for investment adviser activities, you must register as an Investment Adviser.

Other states have different rules that will allow you to operate your hedge fund without being a Registered Investment Adviser (RIA). Determining whether you need to become an RIA should be one of the first steps you take in the process of forming your hedge fund.

Answering a "Must I register?" post is not something that can or should be done on a message board. It is an answer to a specific set of circumstances, and the answer would vary based on where you live and on your answers to a number of questions. I would be happy to help you outside of the board, but I am not here to solicit business. Talk to an experienced professional or to an attorney specializing in this field. It's an important question, and it deserves the full attention of a professional.
 
Couldn't state registration be avoided with a web-only based presence? There's no in-state office if all transactions are on-line. Obviously, the GP would be trading in that state from their house, but not sure if that is considered physical presence.

I'm looking into starting a fund in 2005, backtesting as we speak, and am very interested in the services described in prior posts. In the initial phase and drafting business plans, identifying invesors (family).

Tom
 
As part of Bright Securities, as opposed to Bright Trading, we are accepting Hedge Funds now. This way you can get the lower rates and good market access. We have already gone through all the legalities involved.


Feel free to call Don or Bob at: 800.249.7488

Don
 
Good to know.

I'm reviewing several trading platforms for cost/execution, etc. I'm also interested in the ability for trading-tracking software to keep a log of the trades in order to provide monthly statements and k-1 tax info. Does Bright interface with any software of this nature? I am assuming certain software programs only work with certain brokers/platforms.

Regardless, it looks like I'll have to take my 65 (got the 7 & 63) in order to be state registered before I can do much else. I was hoping to avoid state registration...

Tom
 
Don
With Bright Trading and the trading platform you use, Do you have the ablility to review your daily trades via Web-site?
Also I have heard that you put on a boot camp of sorts at your Las Vegas Office, How often do you have these classes?
Thanks
 
Quote from wesgttcpa:

Answering a "Must I register?" post is not something that can or should be done on a message board. It is an answer to a specific set of circumstances, and the answer would vary based on where you live and on your answers to a number of questions.
More...


You are 1000% accurate in saying this.

I have a Offshore entity (BVI) with lots of moving parts. IMO to design all but the most simple entity requires good solid legal and accounting counsel from ALL of the jurisdictions in which one plans to operate.

You simply do not want to go about this in a half-asses way. The pitfalls and the downside are just too great. The last thing any trader wants or needs is some pain-in-the-ass prosecutor from the Justice Dept or the SEC breathing down your neck for the violation of some statute of which you weren't even aware was on the books.

And that doesn't even touch on the civil side. It can get real ugly real quick if one of your investors feels slighted or God forbid, defrauded. Luckily I've never experienced anything like that but every professional business, which is what a Hedge Fund is, must plan for such contingencies.

My advice for anyone who is planing to take on client capital as an advisor is do not try to take any short-cuts, they will only bite you in the ass later on. And do your homework and consult and pay for competent legal counsel.



Regards,
Dr. Zhivodka
 
From what i've read, it appears offshore funds are for non-US residents, etc.

Athough I've read in other documents that offshore funds have been offered to residents of the united states. I'm not sure why there is this discrepancy.

I understand the workings of the feeder corp, etc., and was also thinking of the Cayman islands (I'll be there on Friday actually) as a place to set up my hedge fund. Question is, if it is hands down impossible or not feasable to have non-US investors then I'm not interested.

Is there a definitive answer to this question? Am I asking the wrong question? Am I missing something?

Tom
 
Quote from tjs:

From what i've read, it appears offshore funds are for non-US residents, etc.

Athough I've read in other documents that offshore funds have been offered to residents of the united states. I'm not sure why there is this discrepancy.

I understand the workings of the feeder corp, etc., and was also thinking of the Cayman islands (I'll be there on Friday actually) as a place to set up my hedge fund. Question is, if it is hands down impossible or not feasable to have non-US investors then I'm not interested.

Is there a definitive answer to this question? Am I asking the wrong question? Am I missing something?

Tom
More...

What you're missing is the advice of a serious hedge fund attorney. PM me if you want one who used to prosecute cases for the SEC - he's the one we use, and he's set up many on the Caymans.

I could not agree with Dr. Z more. It is not a game of roll-your-own.

PTR
 
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