Posts tagged as:

accredited investor

Qualified Eligible Person (QEP) Definition

December 24, 2009

The securities laws can be written obtusely and the definition of a qualified eligible person (QEP) may be one of the best examples of this.  There is no quick and easy definition of a what a QEP is so we are trying to make it as easy as possible to understand.  This post discusses the [...]

Read the full article →

Accredited Investor Net Worth Question

May 6, 2009

Most hedge funds will require investors to be “accredited investors.”  In general, a natural person is deemed to be an accredited investor if (1) the natural person has an individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase (i.e. investment into the hedge [...]

Read the full article →

Hedge Fund Law Questions

February 12, 2009

Recently I have received a few good hedge fund law questions.  Please remember that these answers are general discussions of the law and should not be a substitute for actual legal advice.  This discussion does not form an attorney-client relationship, please see our disclaimer.
****
Question: [with reference to the new Hedge Fund Registration article] So what’s [...]

Read the full article →

Hedge Fund Investors Overview

October 15, 2008

The lifeblood of the hedge fund industry are hedge fund investors, those persons and institutions which put their money at risk with the hope of generating positive investment returns.  While there have been recent predictions of large amounts of investor money leaving the hedge fund space due to poor performance, there are many potential hedge [...]

Read the full article →

Section 3(c)(1) Hedge Funds

October 14, 2008

Almost all hedge funds which trade securities are deemed to be “investment companies” under the Investment Company Act of 1940.  All “investment companies” are required to register under the Investment Company Act (like all mutual funds must do) unless the “investment company” falls within an exemption from the registration provisions.
There are two separate exemptions from [...]

Read the full article →

What happens if a hedge fund doesn’t do proper diligence to ascertain that a client meets the qualified purchaser standards?

September 24, 2008

This question came to us yesterday:
Question: What happens if a hedge fund doesn’t do proper diligence to ascertain that a client meets the qualified purchaser standards? Does the hedge fund have to register or notify the SEC?
Answer: In practice I don’t know how this would happen unless someone at the hedge fund management company was [...]

Read the full article →

What is a qualified purchaser?

September 18, 2008

We have previously discussed the difference between a 3(c)(1) hedge fund and a 3(c)(7) hedge fund. Unlike a 3(c)(1) hedge fund where investors only generally need to be accredited investors and potentially qualified clients, all investors in a 3(c)(7) hedge fund must be “qualified purchasers.” A qualified purchaser is a greater requirement than [...]

Read the full article →

What is a qualified client? Qualified client definition

September 17, 2008

Certain hedge fund managers need to be registered as investment advisors with the SEC or with the state securities commission of the state which they reside in.  For the SEC registered investment advisors, and most state registered advisors, the investors in their hedge fund will need to be “qualified clients” in addition to the requirement [...]

Read the full article →

What is an accredited investor? Accredited investor definition

September 17, 2008

Hedge fund managers can only admit certain investors into their hedge funds.  Most hedge funds are structured as private placements relying on the Regulation D 506 offering rules.  Under the Reg D rules, investors must generally be “accredited investors.”  Many hedge funds have additional requirements.
With regard to individual investors, the most common of the below [...]

Read the full article →

Hedge Fund Websites - How to Run a Hedge Fund Website

September 15, 2008

A common question from start up hedge fund managers is what kind of a website can I have and how do I go about getting investors through an internet solicitation? The unfortunate answer is that hedge fund managers must be very careful when they are designing their website. In general, websites for a [...]

Read the full article →