Start an NFA Exempt Forex Fund, Commodity Pool or NFA Exempt Managed Account Business
What is a Commodity Trading Adviser (CTA)? A CTA is an individual or organization which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts, options on futures, or retail off-exchange forex contracts. CTAs are responsible for advising managed accounts and pooled investment vehicles, such as commodity pools. CTAs also advise investors about the value of commodity futures or options or the advisability of trading in commodity futures or options. Commodities regulations apply to a hedge fund’s manager (CTA) or sponsor (CPO). Sometimes, the CPO and CTA are the same entity. Click Here for a Summary of Registration Exemptions
Already Running an NFA Exempt Managed Account Business or Exempt Commodity Pool? The CFTC requires any person claiming an exemption or exclusion from CPO registration under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or an exemption from CTA registration under 4.14(a)(8) to annually affirm the applicable notice of exemption or exclusion within 60 days of the calendar year end. Let us help you! We will file the required annual affirmation notice on your behalf with the NFA. Should you be interested in our filing services, please contact us. We will not be able to file the NFA annual affirmation until you authorize payment for our filing services. We accept payment by check, bank wire, credit card and PayPal. Click Here to Sign Up for Services
Should I Set Up a Managed Account Business or a Hedge Fund? It costs more money to set up a hedge fund and the process takes a little longer. If you have customers ready, willing and able to commit money now, start by setting up a managed account business and add a hedge fund later.
With a managed account business, you do not have to hire an auditor and an administrator. Your customers will open trading accounts at the broker you direct them to and you will manage their accounts pursuant to the managed account agreement you ask them to read and sign before committing to you and your trading program. Contact Us for Assistance Setting Up a Managed Account Business
How long does it take to start a hedge fund? It really depends on your circumstances because no two funds (including the people who want to start them) are completely alike. In the United States, companies can be formed in a matter of just a few minutes. For example, in the State of Florida, a company can be formed over the Internet in less than ten minutes for about $120 USD. In the United States, no minimal capital is needed to form a company. Even a U.S. tax identification number (i.e., EIN or "employer identification number") can be obtained from the U.S. Internal Revenue Service over the Internet.
How many investors can invest in a U.S. hedge fund? If you set up a U.S. hedge fund you have two choices. If all of your investors, without exception, are “qualified purchasers,” your U.S. hedge fund can accept up to 500 investors. This type of hedge fund is referred to as a "3(c)(7) fund". "Qualified purchasers" are generally those that have $5 million in net investment assets. Once a 3(c)(7) fund reaches 500 investors, it may be required to register under the Securities Exchange Act of 1934. Learn More About Hedge Fund Regulation
If you are not able to satisfy the qualified purchasers only requirement, your U.S. hedge fund will have to operate on a smaller scale; one that can accept up to 100 investors. This type is of hedge fund is referred to as a "3(c)(1) fund". Of the 100 investors it can accept, only 35 can be non-accredited investors. Learn More About Accredited Investors
While Section 3(c) of the Investment Company Act of 1940 provides exemptions from registration, it does not negate the need to file a Form D with the U.S. Securities Exchange Commission (SEC) for the hedge fund and state blue sky filings. Learn More About Hedge Fund Law and Learn More About SEC Form D & State Blue Sky Hedge Fund Filings Additionally, operating under one of the Investment Company Act exemptions does not negate the need of the hedge fund's manager to register as an investment adviser.
Equity Funds If the hedge fund trades securities, ETFs, etc., and has U.S. investors, the hedge fund manager will have to register either with the SEC or its "home" state unless an exemption from investment adviser registration is available to it. Learn More About Investment Adviser Registration We offer SEC and state-level investment adviser registration services. Contact Us for Assistance
Where do I set up a U.S. Hedge Fund? In the United States, hedge funds are found chiefly in Delaware. U.S. hedge funds are established primarily in Delaware because Delaware offers the most advanced business friendly law in the United States. In fact, Delaware’s business friendly environment is attractive to companies across the globe, not just hedge funds. Learn More About Delaware Companies Governing law matters. Contact Us for Assistance We offer company formation services, registered agent, registered office & virtual office service in Delaware.
CPO and CTA Exemptions If you can’t take advantage of an exemption from NFA registration, you must register with the CFTC, join the National Futures Association (NFA) and comply with detailed disclosure, record keeping and reporting regulations. The CFTC is an independent agency of the U.S. government responsible for regulating commodity trading. The NFA is a self-regulatory organization to which the CFTC has delegated certain registration functions, including the registration of commodity pool operators (CPOs) and commodity trading advisers (CTAs). Click Here for a List of CPO and CTA Exemptions and Exclusions
CTA Exemptions CTAs are required to register with the NFA unless they meet certain criteria pertaining to the size and scope of services offered. All registered CTAs who manage customer accounts must be NFA members.
Generally, a CTA is exempt from registration if: it is registered as a CPO and its commodity trading advice is directed solely to, and for the sole use of, the pool or pools for which it is so registered; it is exempt from registration as a CPO and its commodity trading advice is directed solely to, and for the sole use of, the pool or pools for which it is so exempt; or during the course of the preceding 12 months, it has not furnished commodity trading advice to more than 15 persons and it does not hold itself out generally to the public as a CTA.
Exemptions are narrowly construed by the regulators and the courts. If you meets the requirements of CFTC Regulation 4.14(a)(10) you are not required to file a notice of exemption.
Why a U.S. Hedge Fund? Even if you are based in another country, consider forming a U.S. hedge fund. The United States offers easy low cost access to the legal, tax, accounting, retail and institutional brokerage, and the regulatory services needed by a hedge fund sponsor to organize a hedge fund. Despite what some hedge fund sponsors think about the purported negativity surrounding the United States, many more establish U.S. based hedge funds because of the minimal expenses associated with starting a U.S. hedge fund and the sheer convenience of having their U.S. based family members and/or other U.S. investors able to invest in the hedge fund.
Hedge fund sponsors (i.e., the organizer(s) of the hedge fund) based outside the United States are usually surprised to learn about the “light touch” of U.S. regulation and low costs associated with forming a U.S. hedge fund. Read Our Leading Media Article "American the Beautiful Tax Haven"
Minimal U.S. Legal Infrastructure Needed To start a U.S. hedge fund, you generally need to form two business entities: the hedge fund and its investment manager. The hedge fund is typically set up as either a Delaware Limited Partnership (LP) or Limited Liability Company (LLC). Learn More About Delaware Company Formations The investment manager can be set up as a LLC, or as some other type of business entity in your home state or country. We can form both entities for you quickly and for a low fee. Contact Us for Assistance Hedge fund sponsors based offshore can set up both a hedge fund and its management company in the United States. Learn More About U.S. Company Formations
The United States Allows Hedge Fund Advertising The JOBS Act, signed on April 5, 2012, lifted the ban on hedge fund advertising for hedge fund's operated by fund managers registered with either the SEC or a state regulator. The decades-old restriction on how hedge funds can raise money is gone! Hedge fund managers can speak publicly about their hedge fund's strategies and performance and advertise normal channels. Learn More About Hedge Fund Marketing & Raising Capital
The United States is a Safe-Haven for Business A 2006 Government Accountability Office report, found that most other states do not require ownership information when businesses are formed or don't have to submit periodic reports. Read the GAO 2006 Report of U.S. Company Formations In addition to Delaware, Nevada and Wyoming are advantageous places to set up a company. Learn More About U.S. Company Formations
Given the depth, privacy, predictability and pro-business cast of Delaware's company law, it makes good business sense to set up a hedge fund in Delaware. Contact Us for Assistance We offer company formation services, registered agent, registered office & virtual office service in Delaware.
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Capital Management Services Group, Inc. is recognized by discriminating business owners as being the foremost tax and legal authority in the hedge fund industry. Attorney Hannah Terhune's education and experience are unsurpassed in the area of hedge fund creation, development and launch. Ms. Terhune's extensive international tax knowledge and hedge fund experience have made her an indispensable resource for serious hedge fund and business professionals. Ms. Terhune's numerous articles on the subjects have appeared in over 100 publications worldwide. Chances are, if you have read anything related to the hedge fund business, Ms. Terhune wrote it.
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Give us the opportunity to use that knowledge and experience for you. Each client receives personalized attention from our attorneys and staff. No client is too large or small for us. We pride ourselves in providing personal attention to each client. We provide the best services and support needed for hedge funds and business projects. No need to coordinate work between accounting, administrative and law firms--we handle the entire hedge fund business process from start to finish. We offer legal services, accounting services, tax planning services, tax return preparation services, business consulting services, and U.S. and offshore company formation services. We provide high quality services at competitive rates. But don't take our word for it, give us a call and let us prove what we can do for you.
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