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Domestic Fund Formation It is a simple process to enter the hedge fund industry; practically anyone with $15k to $20k can start a hedge fund and forming a hedge fund gets easier every year.
Offshore Fund Formation An offshore hedge fund is simply a structure used by hedge fund managers as a way to attract offshore investors (non-U.S. citizens) or U.S. tax-exempt investors such as pension and endowment funds.
Hedge Fund Blog
SEC Risk Alert: Selecting Alternative Investments and Their ...
Written by:  Jay B. Gould and Jessica M. Brown The Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations released a “Risk Alert” on January 28, 2014, which focuses on the due diligence investment advisers perform in alternative investments[1] and managers for their clients. After observing an increasing trend in advisers recommending alternative investments to their clients, the SEC examined a group of SEC-registered investment advisers, who collectively manage more than $2 trillion. The purpose of the...
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California’s New LLC Law: Next Steps for California LL...
If your management company or fund was formed as a California limited liability company, you need to review your Operating Agreement to determine whether amendments need to be made. On January 1, 2014, California’s Beverly-Killea Limited Liability Company Act (Old Act) was superseded by the California Revised Uniform Limited Liability Company Act (New Act). The New Act includes a number of substantive changes that may adversely affect existing California limited liability companies unless they amend their operating agreements. READ MORE… Read this article and additional...
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Reminder- March 3rd Deadline for Annual CFTC Exemption Affir...
The annual affirmation process started on December 3, 2013. Advisers who relied on an exemption or exclusion from CPO registration under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or an exemption from CTA registration under 4.14(a)(8) and filed a notice with the NFA must affirm the exemption or exclusion annually within 60 days after the end of the calendar year. Failure to affirm the exemption or exclusion will result in the exemption or exclusion being withdrawn at the end of the affirmation period. Accordingly, those who filed a notice of exemption or exclusion in...
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#TweetedIntoTrouble
Written by:  Jessica M. Brown The Securities and Exchange Commission charged a registered investment adviser and its principal for making false claims over social media regarding their inflated performance claims with respect to a mutual fund managed by the adviser. Through a Twitter account and a widely circulated newsletter, Mark A. Grimaldi and Navigator Money Management (NMM), made various false statements in order to solicit more business. Grimaldi will pay a $100,000 penalty and, along with NMM, agree to be censured, obtain an independent compliance consultant and cease and desist...
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Marketing Your Fund To And Through Consultants And Gatekeepe...
Written by guest contributor, Bruce Frumerman, Frumerman & Nemeth Inc. This article first appeared in FINAlternatives on February 3, 2014 and is re-printed with permission below.  ‘Soft’ manager qualities are often what separates your fund from competitors is a summary finding in the recently reported survey of institutional consultants and gatekeepers by Market Strategies International’s Cogent Reports.  Investment consulting firms are now saying they are paying greater attention to ‘soft’, subjective factors in assessing money managers. ...
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The Volcker Rule–A Suggested Approach for Banking Enti...
Written by:  Joseph T. Lynyak, III and Anthony H. Schouten More than three years following the passage of the Dodd-Frank Act, and intense inter-agency negotiations, the federal financial regulatory agencies collectively adopted the final version of the “Volcker Rule,” or “Rule”—which imposes new and potentially severe limitations on domestic and foreign banking entities’ activities in regard to proprietary trading and investments in “covered funds.”  The 72-page final Rule is accompanied by over 800 pages of interpretative guidance, to...
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SEC-Registered Investment Adviser Agrees to $21 Million Pena...
Written by:  Jessica M. Brown The Securities and Exchange Commission (“SEC”) and the United States Department of Labor (“DOL”) announced sanctions today against Western Asset Management Company (“Western Asset”), a subsidiary of Legg Mason.  Western Asset is an SEC-registered investment adviser and reported $442.7 billion in assets under management as of September 30, 2013. The SEC found Western Asset breached its fiduciary duty to certain ERISA clients when it failed to efficiently correct a coding error that caused losses to over 100 ERISA...
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Amended TIC Form B – Information for U.S. Investment A...
Written by: Jessica M. Brown As a result of recent amendments made by the U.S. Department of Treasury to the Treasury International Capital Form B (“Form B”), private funds and investment advisers may be required to file Form B.  Form B requires a fund manager or investment adviser to report certain information concerning “claims” and “liabilities” of the reporting institution to or from foreign residents. Filing obligations may arise for private funds that provide credit to foreign entities, invest directly in foreign debt instruments, directly hold...
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New FINRA Supervision Rules Approved by SEC
Written by: Jessica M. Brown The Securities and Exchange Commission (the “SEC”) approved two new Financial Industry Regulatory Authority (“FINRA”) rules as part of FINRA’s ongoing rulebook consolidation process. The two new rules approved by the SEC on December 23, 2013 consolidate a number of existing NASD and NYSE rules and interpretations regarding supervision into the new FINRA Rules 3110 and 3120. The new rules will require broker-dealer firms to bring their current supervisory system and written policies and procedures into compliance with a handful of new...
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2014 Examination Priorities Published by the SEC
Today, the Securities and Exchange Commission published its 2014 priorities for its National Examination Program (“NEP”).  These priorities cover a wide range of issues at financial institutions, including investment advisers and investment companies, broker-dealers, clearing agencies, exchanges and other self-regulatory organizations, hedge funds, private equity funds, and transfer agents.  Similar to the 2013 priorities, the 2014 priorities were published to focus on areas that are perceived by the SEC staff to have heightened risk. The examination priorities address...
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