Section 13(d) of the Securities Act of 1934 requires any person who beneficially owns 5% or more of a class of equity securities of a publicly traded company to file a report with the SEC within 10 days of reaching the 5% ownership threshold.  SEC Rule 13d-1 provides more detailed [...]

FINRA to Announce New Investment Banking Examination For many years now all brokers have been treated equally with regard to examination requirements. Whether a broker was working solely with retail clients or solely with institutions on a private placement basis, each such broker would need to take and pass the [...]

Purpose of the Forms and Discussion of Recently Approved Changes & Requirements The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States, and is the entity designated as the filing depository by the U.S. Securities and Exchange Commission for purposes [...]

NASAA Requests Comments on Proposed Changes Form U4 is the form used by Investment Advisory firms to register investment advisor representatives with their firm.  It is also used by broker-dealers to register reps with their firms.  Form U5 is used by both IA and BD firms to terminate a representative’s [...]

What does it mean for a hedge fund to have an affiliated broker-dealer? Definition of Broker-Dealer We will start off by defining a broker-dealer.  Basically a broker-dealer is the term used in the investment management industry for a firm which executes securities trades.  The trades may be executed by these [...]

Hedge fund managers are often confused about their anti-money laundering (AML) obligations and seem to receive different information from various sources.  In general, domestic hedge fund managers do not have any AML obligations.  Additionally, it is unlikely that domestic hedge funds will be subject to any AML requirements in the [...]

The biggest issue for start up hedge funds (and also established hedge fund managers) is how to grow assets under management.  Growing a hedge fund’s capital base is very important because increased AUM mean both increased management fees and performance fees (assuming the fund has positive performance returns).   This article [...]

As I’ve noted in many of my posts, I will try my best to answer your questions or point you to a post within the site which discusses the subject. Below is a common question for licensed brokers who are getting into the hedge fund industry. Question: I currently hold [...]

Question: What licenses do you need to start or manage a hedge fund? Answer: This is a question that comes up quite often. Many people wonder whether they need a series 7 license or the series 65 license or the series 3 to manage a hedge fund. First, a potential [...]

I. INTRODUCTION The Securities Exchange Act of 1934 (“Exchange Act” or “Act”) governs the way in which the nation’s securities markets and its brokers and dealers operate. We have prepared this guide to summarize some of the significant provisions of the Act and its rules. You will find information about [...]