Hedge Funds.

Forming Hedge Funds: Expert Legal Guidance for Your Hedge Fund’s Success

At Randall & Associates, we specialize in hedge fund formation, providing comprehensive legal services tailored to meet the unique needs of investment managers. Whether you're a seasoned professional or an emerging manager, our experienced hedge fund attorneys are here to guide you through every stage of launching and operating a successful hedge fund.

Why Choose Us for Hedge Fund Formation?

Hedge funds are a sophisticated investment vehicle, and setting them up requires careful legal planning and execution. We have helped numerous clients establish hedge funds across various strategies, including equity, fixed income, global macro, and private equity. When you choose us to form your hedge fund, you gain access to:

  • Experienced Hedge Fund Attorneys: Our legal team is composed of attorneys with years of experience in hedge fund law, securities regulation, and private investment vehicles.

  • Tailored Legal Solutions: Every fund is different. We work closely with you to customize legal strategies that align with your investment objectives, target investors, and regulatory considerations.

  • Comprehensive Support: From fund structure to ongoing compliance, we handle all legal aspects of your hedge fund formation, so you can focus on building your investment portfolio.

Our Hedge Fund Formation Services

1. Structuring Your Hedge Fund

The first step in hedge fund formation is choosing the appropriate structure. Our attorneys will advise you on whether to set up your fund as a limited partnership, limited liability company (LLC), or another entity, depending on your needs. We'll help you understand key factors such as:

  • Jurisdiction: Domestic vs. offshore fund structures

  • Tax considerations

  • Investor base and target market

  • Fund management and governance structures

2. Drafting Key Legal Documents

Successful hedge funds are built on strong legal foundations. Our team will prepare all essential legal documents, ensuring that they are compliant with federal and state regulations. These documents include:

  • Private Placement Memorandum (PPM): Clearly outlining the fund’s investment strategy, fees, and risks.

  • Limited Partnership Agreement (LPA) or Operating Agreement (LLC): Defining the roles, rights, and responsibilities of both the fund manager and the investors.

  • Subscription Documents: Detailing investor commitments, investment size, and qualifications.

3. Navigating Regulatory Compliance

Launching a hedge fund requires compliance with a complex regulatory landscape, including the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and state-level agencies. Our hedge fund attorneys will help you:

  • Register as an Investment Advisor (if required)

  • File the appropriate Form D with the SEC

  • Register with CFTC and NFA (if applicable)

  • Comply with anti-money laundering (AML) regulations

We also stay updated on evolving hedge fund regulations to ensure your fund remains compliant with the latest legal requirements.

4. Ongoing Legal Counsel and Compliance Support

Forming a hedge fund is just the beginning. Once your fund is operational, ongoing compliance and legal support are critical to your long-term success. We provide continuous advisory services for:

  • Annual and quarterly filings

  • Investor communications and reporting

  • Contract negotiations

  • Dispute resolution and litigation (if necessary)

The Benefits of Forming a Hedge Fund

  • Flexible investment strategies: Hedge funds offer a wide range of strategies that allow managers to capitalize on market inefficiencies and hedge risks effectively.

  • Attract high-net-worth investors: Hedge funds cater to sophisticated investors, including institutions, family offices, and high-net-worth individuals.

  • Performance-based compensation: Hedge fund managers can benefit from performance fees that align with the fund's success, offering lucrative incentives.

Why Legal Expertise Matters in Hedge Fund Formation

Hedge funds operate in one of the most regulated industries in the world, and small oversights can lead to significant financial and legal consequences. Working with our law firm ensures that you not only comply with all legal obligations but also have the best possible legal framework to succeed.

With Randall & Associates by your side, you’ll be equipped to navigate the complexities of hedge fund formation, from choosing the right structure to ensuring regulatory compliance. Our hands-on, client-focused approach means that we’re with you every step of the way, ensuring a smooth and successful launch of your hedge fund.

Contact Us Today to Start Your Hedge Fund

Ready to form your hedge fund? Contact us today to schedule a consultation. Call 435 612-0422 or CLICK HERE. Our expert hedge fund attorneys are here to help you turn your investment vision into reality.

Hedge Fund FAQ's

  • What is a Hedge Fund?

    A hedge fund operates under a limited partnership structure, primarily engaging accredited investors and institutional participants to pool capital for investment in a wide array of assets. These funds employ diverse investment strategies, including the use of leverage and short-selling, which are designed to amplify potential returns but also introduce significant risks.

    Due to their intricate nature and the variety of strategies employed, hedge funds are subject to a range of legal and regulatory requirements to ensure compliance and protect investors. These regulations may include registration requirements, disclosure obligations, and adherence to specific operational protocols to mitigate risks associated with their investment practices.

  • Do Hedge Funds have to register with the SEC?

    Hedge funds in the U.S. are regulated primarily by the SEC (Securities and Exchange Commission), with additional oversight by state securities authorities. Typically, hedge funds managing less than $150 million in assets can operate under a state exemption and are not regulated by the SEC. Each state has a different set of requirements for funds operating under state exemptions.

    The most common exemptions from registration as a registered investment company are found under Section 3(c)1 and 3(c)7 of the Investment Company Act The most common exemptions from registration under the Securities Act are found under Regulation D, specifically Rule 506(b) and Rule 506(c).

  • How long does it take to set up a new Hedge Fund?

    We begin with a kickoff meeting to outline the structure of your new fund. We'll discuss creating the required LLC's, Limited Partnerships, and other important details to ensure you are set up correctly and remain compliant. We will also discuss your investment strategies and recommend key providers such as prime brokers and banks.

    After we create a roadmap for your new fund, we will work to make it a reality. We'll monitor key deadlines and guide you through drafts of essential documents like the Private Placement Memorandum (PPM), Limited Partnership Agreement, and Subscription Agreement.

    Every fund and manager is unique, so choosing a law firm that will tailor the fund to meet your specific needs and those of your investors is critical. Depending on how much planning is required we can typically get you up and running anywhere between 5 business days to up to two weeks.

  • What laws govern Hedge Funds?

    1. Securities Act of 1933

    Hedge funds typically rely on exemptions from registration under the Securities Act of 1933. The most common exemptions are found in Regulation D, specifically Rule 506(b) and Rule 506(c), which allow hedge funds to offer securities without registering with the SEC, provided certain conditions are met.

    Rule 506(b): Hedge funds can raise unlimited capital from accredited investors and up to 35 non-accredited investors, though the latter must demonstrate financial sophistication.

    Rule 506(c): This exemption allows general solicitation but restricts investment to accredited investors who must be verified.

    2. Investment Advisers Act of 1940

    Hedge fund managers who provide investment advice are subject to the Investment Advisers Act of 1940. Depending on the size of the hedge fund, the manager may need to register with the SEC as an investment adviser or comply with state regulations.

    Exempt Reporting Adviser (ERA): Funds managing less than $150 million in private fund assets can apply for ERA status, which exempts them from full registration but still requires them to file annual reports with the SEC.

    3. Dodd-Frank Act

    The Dodd-Frank Wall Street Reform and Consumer Protection Act imposed significant new regulatory requirements on hedge funds. Under Dodd-Frank, funds with more than $150 million in assets must register with the SEC and submit periodic reports to assist the SEC in monitoring systemic risk.

  • What is the typical structure of a Hedge Fund?

    Hedge Funds are open ended funds that pool investor's capital. Typically hedge funds are operated as Limited Partnerships. The fund can be set up as a Limited Partnership in Delaware or wherever the fund manager resides or operates the fund.

    The fund manager is also known as the General Partner of the fund. The fund manager typically manages the fund via their own LLC. Each investor is considered a limited partner or LP in the fund and wires their investment into the fund's (Limited Partnership's) bank account

    The standard documents required to operate a hedge fund include a private placement memorandum (PPM), a subscription agreement, the limited partnership agreement, investor certifications, and funding instructions.

    Our hedge fund lawyers and hedge fund legal services are a flat fee, all inclusive service to get hedge funds set up and running quickly.