Wednesday, November 09, 2005
How to Start a Hedge Fund
From www.greentradertax.com - Starting a Hedge Fund:
Starting a Hedge fund--part 5 of 5
12 Steps to set up your hedge fund
1. Choose your provider wisely!
2. If you need to register as an Investment Adviser, start the process. This process should be done concurrently with the rest of this list. See www.iard.com to get started on this process.
3. Determine what will make your hedge fund unique to you. Finalize the fund’s Investment Objective and Investment Strategies, prepare biographical data on yourself to include in the offering documents, and make decisions that will affect how often you accept investors, how you will be compensated, what expenses the Fund will bear as opposed to the Management Company, how you will be set-up as to trader tax status, etc.
4. 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/registra...membership.asp. You will need to register as a Commodity Pool Operator with the NFA. See http://www.nfa.futures.org/registration/cpo.asp.
5. Obtain a first draft of your offering documents from your provider (Private Placement Memorandum, LLC Agreement, and Subscription Materials). Do a very through review of the first draft of your offering documents. Ask questions to make sure you understand all of the aspects of your fund as defined in the offering documents.
6. Form your entities, get the tax ID numbers, make the appropriate IRS elections, and prepare resolutions so you can open bank and brokerage accounts.
7. Your provider’s attorney should be actively involved in the review of your documents. This is an important part of the preparation of your fund.
8. 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.
9. Your provider should give you the SEC Form D and the blue sky filings for the initial states where you expect to distribute your offering documents. Make sure your provider gives you instructions on how and where to file the various documents, and general instructions regarding the distribution of your offering documents. You should now have a final set of offering documents
10. Take your offering documents to a Kinko’s-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.
11. Mail your SEC Form D. You can check to see that it was processed by the SEC here: http://www.sec.gov/edgar/searchedga...anysearch.html. File your blue sky filings within the appropriate time—either before distribution or within 15 days of the first sale in that state, depending on the state’s rules.
12. Start distributing your offering documents and attracting investors. Keep a log of all individuals to whom you distribute your documents. Deposit your seed capital and start the initial trading of the fund.
Other Web Resources:
Also see the links in the Sidebar (such as those for the NFA if you want to set up a commodities pool).
Securities Law: http://www.law.uc.edu/CCL/sldtoc.html
State Securities Administrators: http://nasaa.org/nasaa/abtnasaa/memberweb.asp
CFTC Law and Regulation links: http://www.cftc.gov/cftc/cftclawreg.htm - cea
Investment Adviser application (for most states): www.iard.com
__________________
Wes Cooper, CPA
www.greentradertax.com
Starting a Hedge fund--part 5 of 5
12 Steps to set up your hedge fund
1. Choose your provider wisely!
2. If you need to register as an Investment Adviser, start the process. This process should be done concurrently with the rest of this list. See www.iard.com to get started on this process.
3. Determine what will make your hedge fund unique to you. Finalize the fund’s Investment Objective and Investment Strategies, prepare biographical data on yourself to include in the offering documents, and make decisions that will affect how often you accept investors, how you will be compensated, what expenses the Fund will bear as opposed to the Management Company, how you will be set-up as to trader tax status, etc.
4. 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/registra...membership.asp. You will need to register as a Commodity Pool Operator with the NFA. See http://www.nfa.futures.org/registration/cpo.asp.
5. Obtain a first draft of your offering documents from your provider (Private Placement Memorandum, LLC Agreement, and Subscription Materials). Do a very through review of the first draft of your offering documents. Ask questions to make sure you understand all of the aspects of your fund as defined in the offering documents.
6. Form your entities, get the tax ID numbers, make the appropriate IRS elections, and prepare resolutions so you can open bank and brokerage accounts.
7. Your provider’s attorney should be actively involved in the review of your documents. This is an important part of the preparation of your fund.
8. 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.
9. Your provider should give you the SEC Form D and the blue sky filings for the initial states where you expect to distribute your offering documents. Make sure your provider gives you instructions on how and where to file the various documents, and general instructions regarding the distribution of your offering documents. You should now have a final set of offering documents
10. Take your offering documents to a Kinko’s-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.
11. Mail your SEC Form D. You can check to see that it was processed by the SEC here: http://www.sec.gov/edgar/searchedga...anysearch.html. File your blue sky filings within the appropriate time—either before distribution or within 15 days of the first sale in that state, depending on the state’s rules.
12. Start distributing your offering documents and attracting investors. Keep a log of all individuals to whom you distribute your documents. Deposit your seed capital and start the initial trading of the fund.
Other Web Resources:
Also see the links in the Sidebar (such as those for the NFA if you want to set up a commodities pool).
Securities Law: http://www.law.uc.edu/CCL/sldtoc.html
State Securities Administrators: http://nasaa.org/nasaa/abtnasaa/memberweb.asp
CFTC Law and Regulation links: http://www.cftc.gov/cftc/cftclawreg.htm - cea
Investment Adviser application (for most states): www.iard.com
__________________
Wes Cooper, CPA
www.greentradertax.com
Disclamier:
The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities. Past performance is no guarantee of future results.
