I will no longer be responding to comments on this particular post as I do not want to cross into the realm of providing (or seeming to provide) legal, accounting, or securities advice. This article should give you enough to start your research on how to start a fund.

Thanks for understanding.

First of all, your blog is really great; I really appreciate your insight. Regarding what you said:

“Jon: You can run “separate accounts” for family and friends, whereby you make all the investment decisions but the accounts are in their name. We do that at Meridian. When running separate accounts, you can’t have a performance fee except in limited circumstances. Check out this explanation on Meridian and Section 205 of the Investment Advisors Act of 1940.”

I would like structure my company in a similar fashion…if I understood what you wrote correctly, your company is running separately managed accounts (SMA).

So would these be the step I need to take for the SMA process (vs hedge fund)?:

1. Set up my LLC through my state

2. Get a tax ID number (IRS)

3. Become an investment advisor (i.e take the Series 65 exam)

4. Since I don’t want to run a hedge fund, but SMA (i.e my master account linked to my clients’ accounts), do I still need to create an investment advisory company to shield me from personal liability, or is the LLC I created in step 1 going to do that for me and allow me to manage clients’ accounts?

5. Register my LLC company as the RIA through the Investment Adviser Registration Depository (IARD). Then “register” myself with my firm by filing a Form U-4.

6. Set up an institutional account with broker (TD Ameritrade, Scottrade, etc) and have client do the same and authorize me to trade on their behalf (like Meridian does, if I got it right)

So, to sum it up, can I manage account via my investment advisory firm without using a hedge fund?

Thanks again!

David

Sincerely,Alexandr,Donetsk,Ukraine.

What is the minimum dollar amount you can put up to start this fund? If the investments

return lets say 5% year can that money be taken as salary from the fund? Are there

restrictions?

Thanks

I would like to lunch my investment advisory and HF but not sure if I got some points right:

1) If I start HF and take money from unqualified investors I cannot charge performance fee but I can charge fixed fee or a percentage of assets value taken into this fund %u2013 is it correct?

2) Can I mix in the same Fund (organized as LP) money from qualified and not qualified investors but charge performance fee only to qualified?

Thank you!

I have a lawyer in the family. A very god one. But he doesn%u2019t deal with setting businesses up. Does one need to seek out a lawyer that specializes in a specific area to get help or will my father in law do? For what it is worth, we all get along very well.

Are there any new laws coming down the pipe that might affect you? I think there is talk of making hedge funds more transparent post Maddoff.

It%u2019s interesting to read your comment about being able to use Ameritrade as your brokerage (discount).

The hardest thing for me is that if I did set p a hedge fund I would feel like a thief using the commonly heard of fees. A flat rate and 25% of anything over 6% in gains each year. The thing is, until many millions are managed, this is the only way to do this FULL TIME until enough money is managed in order to make people not feel ripped off. Any advice on how to handle fee structures?

Since there are some outlandish fees regarding minimum net worths for your clients, is there any way around this?

I like the idea behind the Tarpon Fund. What kind of fee structure does he use?

Wow, I read this entire discussion on setting up hedge funds. Fascinating! Off to read more about this “spoke fund” that Tarpon Fund basically is.

I was thinking of soliciting to fund managers at smaller companies. would that be wise?

I understand how that can be so unethical, how ever just want to acquire really good arsenal.

Hi I pretty much have the money as im starting up my fund.

I’m gearing toward very wealthy individuals and entities.

and placing funds into the private placement world as I work with a few private trading

platforms.

what advise should I have and need to know to target the wealth?

How do I find these individuals?

whats my approach?