Poly Financial Reg 4 - Hedge Funds The term is absent from...

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Hedge Funds
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The Hedge Fund – Legal Definition and Structure There is no legal definition of a hedge fund. The term is absent from federal securities laws. As much as fourteen different definitions have been identified in government and industry publications. A hedge fund can be thought of as a catch- all provision designating: any privately organized pooled investment vehicle administered by professional investment managers whose interests are not sold in a registered
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The Hedge Fund – Legal Definition and Structure Hedge funds are typically structured as limited partnerships (LP) LP is a legal entity characterized by: The presence of both general and limited partners To achieve maximum separation of ownership and management General partners have the authority to legally bind the partnership As opposed to limited partner, general partners have joint and several liability for the debts of the partnership. A general partner typically manages the fund for a fixed fee (typically a percentage of assets under management) and a percentage of the gross profits from the fund (the “carry” or “carried interest”). The investors are limited partners with no managerial oversight.
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Investment Company Act The Investment Company Act is legislation passed by the U.S. Congress dealing with the regulation of investment companies. It applies to any fund that issues securities and "is or holds itself out as being engaged primarily . . . in the business of investing, reinvesting, or trading in securities." Among other things, the Investment Company Act requires registration with the Securities and Exchange Commission (SEC) and sets reporting requirements to investors.
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Investment Company Act Exemptions Unlike their mutual fund counterparts, most hedge funds fall outside the scope of the Investment Company Act by availing themselves of applicable exemptions, such as: Hhaving one hundred or fewer beneficial owner and not offering its securities in a public offering, or Because investors are all "qualified" high net-worth individuals or institutions. This explains why hedge funds have deliberately chosen not to raise capital on public markets. Two recent examples of substantial private initial offerings are that of: Oaktree Capital Management LLC, which sold approximately 14% of its equity for more than $800 million in May 2007, Apollo Management LP, which privately raised $828 million in August 2007. Both transactions listed equity securities on Goldman Sachs &
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Investment Advisers Act The Investment Advisers Act is a companion statute to the Investment Company Act, and was primarily designed to introduce record keeping and anti-fraud standards to the investment advisory profession. Under the Act, investment advisers must register
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This note was uploaded on 04/05/2010 for the course FINANCE AN FRE6211 taught by Professor Chappe,raphaele during the Spring '09 term at NYU Poly.

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Poly Financial Reg 4 - Hedge Funds The term is absent from...

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