Looking good surfer. If you don't mind, could you go over (perhaps in another thread) how you went about setting up your hedge fund (a primer if you will)? Or is it a CTA? Anyways, I'm interested in your trials and tribulations as the next natural evolution of a successful trader.
Having the advance knowledge of knowing the process of setting up a hedge fund is a huge help. Here's the process that I use when we set up a fund for our clients. Hope it's of value. Good Luck! 1. Find a provider to help you. 2. Keep track of all of your expenses for the fund development processâconsider using Quicken to make the tax preparation process easier at the end of the year. 3. Determine whether you must register as Investment Adviser based on the laws in your state (you may chose to register even if not required). 4. Complete the first pass at the Terms Sheet with the definition of topics that will make your fund unique to you. During this time, you will be finalizing the fundâs Investment Objective and Investment Strategies, preparing biographical data on yourself to include in the offering documents, and making decisions that will affect how often you accept investors, how you will be compensated, and what expenses the Fund will bear as opposed to the Management Company, etc. 5. If you need to register as an Investment Adviser, start the process. This process should be done concurrently with the rest of this list. (a) Use www.iard.com to complete Form ADV Part I. (b) Manually prepare Form ADV Part II (not yet accepted electronically). (c) Sign up for the Series 65 examination (unless you already have the appropriate NASD status). (d) Obtain study materials and pass the exam. See this page for providers of study materials: http://www.nasaa.org/nasaa/exams/vendors.asp (e)Complete any state registration application forms. (f) Send in your forms and check for the application fee to the state. 6. If you are forming a Commodity Hedge Fund, start the process of becoming a member of the NFA. See this page: http://www.nfa.futures.org/registration/nfa_membership.asp. You will need to register as a Commodity Pool Operator with the NFA. See http://www.nfa.futures.org/registration/cpo.asp. 7. GTT sends you a first draft of your offering documents (Private Placement Memorandum, LLC Agreement, and Subscription Materials). 8. You may need to pay an interim invoice. 9. Do a very through review of the first draft of your offering documents. Ask questions of GTT to make sure you understand all of the aspects of your fund as defined in the offering documents. 10. Continue collecting additional data needed to answer any outstanding questions from the Terms Sheet. 11. Form your entities. GTT helps you do this to ensure all is set up properly. We look at tax considerations, such as whether your home state requires tax withholding for your investors (which would indicate that you might want to consider a Delaware entity for the Hedge Fund). Unless there are extenuating circumstances, your Management Company should be set-up in your home state. 12. GTT prepares IRS forms for you to use to obtain the Employer ID Numbers (EIN) for your entities from the IRS. Using those forms, call the IRS and get the numbers so you will be able to set up your banking and brokerage relationships. 13. GTT prepares IRS Entity Classification Elections for both your Management Company and your Hedge Fund. File the form for the Management Company with the IRS within 75 days of forming the entity. File the form for the Hedge Fund within 75 days of accepting the first investor other than you into the hedge fund. 14. GTT prepares resolutions for you to use when opening bank and brokerage accounts, as well as a simple LLC Operating Agreement for your Management Company (the Hedge fundâs Operating Agreement is part of the Offering Documents). 15. Respond to GTT inquiries regarding regulatory questions and any outstanding Terms Sheet questions (for example, get your bank and brokerage relationships set-up). 16. GTT prepares interim drafts of your documents as additional Terms Sheet items are defined. Review all interim drafts of your offering documents. 17. After we work together to prepare your final draft, GTTâs attorney performs a thorough review of your final draft, makes any necessary changes, and approves it for distribution. 18. GTT prepares your SEC Form D and the blue sky filings for the initial states where you expect to distribute your offering documents. 19. GTT prepares a final invoice for the hedge fund formation process. We send this to you via e-mail. Upon payment, we send you the pdf copies of your final documents, your Form D and blue sky regulatory filings, instructions on how and where to file the various documents, and general instructions regarding the distribution of your offering documents. 20. Take your offering documents to a Kinkoâs-type store and have it printed and bound. Consider the image you wish your fund to project when choosing the printing materials and binding method. Remember that you can have no marketing materials other than your offering documents. This is a stipulation of the SEC under the rules that allow you to have this type of a private placement. 21. Mail your SEC Form D. 22. If you registered as an Investment Adviser or with the NFA for as a Commodity Pool Operator, ensure that the regulators have approved any such applications. 23. Start distributing your offering documents and attracting investors. Keep a log of all individuals to whom you distribute your documents. GTT provides you with a form you can use for this purpose. 24. File your blue sky filings within the appropriate timeâeither before distribution or within 15 days of the first sale in that state, depending on the stateâs rules. 25. Deposit your seed capital and start the initial trading of the fund. 26. Make certain you filed the Entity Classification Election for the Hedge fund previously provided to you by GTT. 27. Purchase the hedge fund accounting software you are going to use and start recording your fundâs trading activity and the acceptance of investors. We suggest using GTT Trade Depot. 28. Prepare the monthly or quarterly statements for your investors and send out with your cover letter. 29. Continue efforts to attract additional investors.
greentrader, thank you for the detailed start up list. i was fortunate in having a partner who was mentored by a popular "heavy hitter" in the industry. i was specifically advised never to register as an "investment advisor" as this seriously limits your funds agility in an ever changing marketplace. is this a new requirement, as our first fund was set up awhile ago ?? furthermore, what does your group charge for the services mentioned ?? thanks ! surf
Dear Marketsurfer: Registration as an Investment Adviser is an interesting topic. It sounds too weird to be true, but where you live and work determines whether you need to become and RIA (Registered Investment Adviser). If you are required to be an RIA and you do not register with your state, you can create a huge headache for yourself. States are changing their rules (and the SEC may end up weighing-in on the matter given their current work on the entire hedge fund area). Generally, the states can make their own rules in this areaâyou cannot depend on the national exemption. Iâm not trying to scare anyone. But for those states where you must be registered, if you are not, the state can charge you with a felony and hold you personally liable for any losses your investors may have experienced (again, the penalties vary by state). I cannot post our site link, because that is not allowed. But all of our hedge fund pages are in the public (free) section of our site. Thereâs more information there if you want to go looking. You can also check out your stateâs web pages on Investment Adviser registration. Itâs typically part of the Securities Divisionâs website. It might fall under the Secretary of Stateâs site, or the Attorney Generalâs site. Each state is different. Some states have fantastic sites that make everything very clear. Others have much less information. Yes, I can help you if you like (and we do charge for our services). But I donât want to do a sales pitch here. Thatâs not the purpose of the board. If you ask on the board, I will not be able to tell you whether you need to become an RIA in your state. Thatâs information specific to your situation, and is part of our fee service. But Iâve tried to give you at least some information you can use to help you find the answer yourself if thatâs what youâd like to do.
our system LONG trigger was activated in the DJIA and we are currently LONG from 9093. our stops are at 9077 at this time. enjoy ! surfer
the system caught another NICE wave explosion out of the channel. 100 points in the DJIA thus far--- stops currently at 9133 to preserve some profit. best, surfer