It's dangerous to cut corners because the investors could claim the manager violated the applicable law and regulations and sue to get their lost money back.
You might check this out. I looked at it at Barnes and Noble the other day. here's a link. How to Create and Manage a Hedge Fund: A Professional's Guide by Stuart A. McCrary http://www.amazon.com/exec/obidos/t...r=8-1/ref=sr_8_1/002-0165566-9942464?v=glance
It's nice et al. that there are plenty of legal resources available to handle the logistics of actually filing the appropriate paperwork, but that is probably only about 10% of the solution...Maybe, more effort should be focussed on how to really START a hedge fund, ie how to find the right asset allocators, raise capital, figure out certain benchmarks, etc, etc... I dont have an interest in the hedge fund thing, so my comments should probably be dismissed, but I have had some contact with others who have gone thru this process and it has consumed much of their time over the past year and interfered a great deal with their trading time...THis individual also built up a good, steady track record over three years, had all his results audited by a CPA and then has spoken with numerous asset allocators and other such individuals about how to raise capital... I'll shut up now
I'm trying to find out if a few 'friends and family' can join your trading entity. What kinds of activity requires you to form a hedge fund? What kinds of investment, trading activity can be done is just an LLC?
AAA, What if the company is set-up as a partnernership with the express purpose of trading to generate revenue and as such the company gives an individual or group of individuals trading authority. The partners all knowing the company is engaged solely in the business of trading for profit and the risks associated with such trading activities. I am not questioning the validity of your comments, merely suggesting that ; if a small group individuals were to form a company as described would you not see this as a viable, ( and legally sound) alternative to a registered hedge fund? MACD
Puff I'm too tired to look it up, but I think under 99. And under 15 or so no registration needed with any regulatory agency.
Go to Hedge Fund Dynamics and request their free .pdf document "Starting a Hedge Fund in 2001" (they'll send it via email). It's by far the most comprehensive material that I found on the net regarding Hedge Funds. Covers everything from SEC Regulations to Blue Sky Laws. While you'll still need a lawyer to set everything up, this guide will give you a heads up on all of the legalities. It's extremely comprehensive.
An LLC that has fewer than 100 shareholders and whose purpose is investing is a hedge fund. The LLC or limited partnership is the business structure used for hedge funds. Just like law firms are structured as partnerships -- "hedge fund" is the type of business and "LLC" is the business entity structure.
In most cases the decision to form a hedge fund is based on economics. Hedge fund managers can typically earn more than money managers because hedge funds can usually raise more capital than "unregistered" money managers. This is because unregistered money managers are limited in the number of clients they can have. Under current federal and state law money managers are considered to be "investment advisers." Federal law allows unregistered investment advisers up to 5 clients in a 12 month period--although some states allow more. In order to obtain more clients, the money manager/investment adviser must become registered by passing certain exams, filing disclosure documents (Form ADV) and complying with very strict state laws. However, each hedge fund is only 1 client--even though the hedge fund can have numerous investors. Therefore, a hedge fund manager can raise significantly more capital without becoming registered with the SEC or state securities divisions. Let me know if have additional questions. My contact information is on Elite Trader.