Do You Know When to File SEC Form D? Your hedge fund, if based in the United States or if it has U.S. investors, must file Form D with the U.S. Securities and Exchange Commission (SEC). There are no exceptions. The Form D filing relates to the hedge fund and has nothing to do with whether you are required to be licensed as an investment manager to run the hedge fund.
Form D is filed 15 days after the date of the first sale of securities in the offering. Form D must be re-filed to correct a material mistake of fact or error in the previously filed notice (as soon as practicable after discovery of the mistake or error). Hedge fund issuers filing Form D electronically with the SEC must become EDGAR filers by obtaining a unique Central Index Key ("CIK") number and related access codes.
Form D Annual Filing Requirement Form D must be filed annually, on or before the first anniversary of the most recent previously filed notice, if the hedge fund continues to exist.
State Filings Requirements for Hedge Funds
Adoption of the National Securities Markets Improvements Act of 1996 (NSMIA) reduced state regulation of hedge funds. Most hedge funds issue offerings that are exempt from state registration under the Securities Act, in reliance on Rule 506 of Regulation D.
As such, they are "deemed covered securities" under Section 18 of the Securities Act. Under Section 18, covered securities are exempt from state regulations that: (1) require the registration or qualification of securities or securities transactions; (2) impose any requirements related to disclosure documents used in an offering; or (3) impose any merit regulation of such offerings.
U.S. State Filings Required
Each state has a regulatory agency which administers its securities law. You need to study each state's statutes and regulations before initiating any sales activities in a particular state.
Need Help? Contact Us for Assistance
While some states have identical statutory language or regulations covering particular activities or conduct, their interpretation may differ greatly from state to state. Some states require that you file Form D prior to admitting an investor your fund. Some states also require a copy of your offering documents, Form U-2, Form U-2A, Form U-4, and/or an issuer/dealer form.
Don't Wait Too Long to File Allow plenty of time for compliance as many states require the filing of special forms or issuer representations, which require preparation by us and processing time by the state. For example, New York can take as long as four months to process a hedge fund blue sky filing. In New York, four blue sky filings are required. These filings must be accepted by New York one (1) day before an offering is made to a prospect in New York. New York State filing fees are approximately USD $1,400 and the duration of the exemption from registration obtained under New York's securities laws is four (4) years.
Sales by Brokers, Finders and Placement Agents Anyone engaged in selling hedge funds must also be registered in the state where the selling activity takes place, or exempt from broker registration requirements.
How We Can Help You
Hannah Terhune, veteran hedge fund and tax attorney, can answer your questions and handle most regulatory filings, leaving you free to raise capital and run your business. We are in the business of advising hedge fund managers who need assistance with state blue sky filings. We can answer your questions quickly and efficiently. Email us or call (307) 213-4732 for help.
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