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State Investment Advisor Registration Most states require advisors with a place of business in the state to register there. A few states allow in-state advisors to have 5 (or even 15) local clients before requiring registration. Each state has its own registration requirements and you should research the rules of each state in which you do business.  Contact Us For Help Today

RIA Formation, Registration & Compliance Investment adviser registration requires an understanding of the complexities of hedge fund and investment adviser law.  Learn About Investment Adviser Law & Regulation We have extensive expertise in forming and registering start-up investment advisers with the SEC and with the States. We provide our RIA formation, registration and ongoing compliance services for a cost-effective flat rate fee.  Contact Us For Help Our investment adviser registration, compliance and legal services typically include the following.

Business Model Consulting

1. Business Model Consulting.  We send you a questionnaire to gather information from you, review your investment approach, investment fees, and investment policies and other business decisions.
2. Business Model Planning.  We have a telephone meeting to review your goals and investment business model.

Project Management Consulting

1. Project Management.  We plan and management the registration process with the regulator and prepare the deliverables so that the registration can proceed as discussed.  We send bi weekly status updates to you through email. We are always available by phone.

Registration Administration

1. FINRA Entitlement Access.  Obtain rights for the FINRA IARD and CRD Systems for regulatory filings and payment of fees.  This will also assign you a Company Level CRD No.
2. FINRA System Configuration.  We configure the IARD, CRD and E-Bill Systems with you so that you are the primary administrator and we are an alternate administrator.
3. Give guidance on the amount necessary to fund your firm’s IARD/Web CRD account to cover the registration and user fees that will initially be charged by the IARD/Web CRD and applicable securities regulators.  We calculate the required regulatory fees and provide instructions to you for payment.  We can also assist with making these payments upon your request.

RIA Registration

1. We will research and validate applicable regulatory requirements for registration.
2. Serve as an IARD/Web CRD Service Bureau for your firm during the registration process and thereby electronically file applicable application documents on behalf of your firm.
3. Prepare and file the Form ADV Part 1A and Part 1B (online via the IARD System).
4. Prepare and file the Form ADV Part 2A and 2B (“Disclosure Brochure”).
5. Privacy Policy Statement.  Develop a Privacy Policy Statement for your use in your business.  This governs your use of client personal information. The Privacy Policy Statement must be provided to your  clients at the beginning of the client relationship and annually thereafter. It discloses how your firm stores, handles, and disseminates client information.
6. Compliance Manual.  We develop a Written Supervisory Procedures Manual (WSP) for your business. This is also called Policies and Procedures Manual.
7. Code of Ethics.  We develop a Code of Ethics outlining your duty to your clients as required by law.
8. Business Continuity Plan.  We develop your Business Continuity Plan (“BCP”) outlining how you will address
   continuation in the event of a business disruption or loss of key personnel.
9. Anti-Money Laundering Policy.  We develop an AML Policy for your business as required by proposed federal law (pending).
10. Advertising Review. Review of your website, firm presentations and other client documents.
11. Email & Information Security Policy. Develop disclosures for your email signature.We develop an information security policy for your firm to address regulatory and cyber security concerns. The policy includes an inventory of your firm's technology infrastructure, security guidelines, user login and password management issues, and the use of antivirus software.
12. Supplemental Registration Requirements.  We submit additional regulatory documents if requested by the regulatory.  We serve as liaison with the SEC and/or state securities regulators regarding any questions associated with your firm’s application.
13. Correct any deficiencies identified by the SEC and/or state securities regulators.
14. Client Agreements.  We prepare an Investment Advisory Agreement with an investment policy statement so that your firm meets SEC standards for advisory contracts.
15. Prepare the Form U4 (via Web CRD system) to register each Investment Adviser Representative. Verify Form U4 disclosures are consistent with Form ADV disclosures. Filing Form U4 triggers a notice to compliance of any active registration.  Filings for IARs with material adverse financial, regulatory or criminal matters may be subject to additional fees due to the extra amount of time required.

Form ADV Annual and Material Changes Updates  You must file an annual update to your Form ADV after the end of your fiscal year. Inaccurate, misleading or omitted Form ADV disclosures is a frequently cited deficiency in SEC and state RIA examinations.  During the year, if there are material changes to the information on your Form ADV, you should file an "other-than-annual" amendment within 30 days of the material change.  Regulators cannot answer questions about whether a change is deemed material; however we can!  We offer low cost and ADV filing services. Contact Us For Help

Investment Advisers The Investment Advisers Act of 1940 regulates the activities of investment advisers.  Learn More About Hedge Fund Law  An "investment adviser" is "any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities."   Learn More About Hedge Fund Law  You also have to look state law for clarification.  For example, the definition of “investment adviser” under the Corporate Securities Law of 1968 in California has its source in the Investment Advisers Act and California law looks to SEC Release IA-1092 to aid in the interpretation of the term. Cal. Corp. Code § 25009.  See also Commissioner’s Release 80-C (May 25, 1993) and Commissioner’s Release 110-C (April 9, 1998).

Investment Advisor Representatives (IAR) State laws define an IAR as anyone employed by or associated with a registered advisor who makes recommendations or gives advice on securities; manages client accounts; holds himself out as providing investment advice; or is compensated for soliciting clients for an advisory firm. The definition generally excludes clerical or ministerial employees, and supervised persons without a place of business in the state or who have no more than five natural person clients. Some states may impose licensing, registration, examination, or qualification requirements on IARs of SEC-registered advisory firms if the employee has a place of business in the state and has more than five clients who are individuals (natural persons) and more than 10% of his or her clients are natural persons. Some states only require the registration, licensing or qualification of IARs of a state-registered advisor if the firm has a place of business located in the state or had five or more clients residing in the state during the prior twelve months. Investment adviser representatives must pass the Series 65 Exam and be added to the registration.

Exam Requirements & Waivers Most states require the Series 65 Exam - Uniform Registered Investment Adviser Examination.  The Series 65 Exam is waived by some states if the applicant has the CFP (Certified Financial Planner), the ChFC (Chartered Financial Consultant), APFS (Accredited Personal Financial Specialist), CFA (Chartered Financial Analyst), the CIC (Chartered Investment Counselor), or other designations or items as ruled by the (state) administrator.

What is the Series 65 Exam?  The Series 65 exam is designed to qualify candidates as investment adviser representatives.  The exam covers topics you need to understand in order to provide investment advice to clients.  The Uniform Investment Adviser Law Examination consists of 130 questions plus 10 pretest questions covering the materials outlined in the following study outline. Applicants are allowed 3 hours to complete the examination.  At least 89 (68.5%) of the questions must be answered correctly for an individual to pass the Series 65 exam. Some states require the principal of the RIA to pass the exam with a score greater than 70%.  The examination is conducted as a closed book test. Upon completion of the examination, the score for each section and the overall test score will immediately be made available to the candidate.  The examination is administered by the FINRA. Once registered, FINRA will open a 120-day window within which you may schedule the exam.

What about the Series 66 and Series 7 Exams?  An alternative to the Series 65 is the combination of the Series 7 and Series 66 exams.  The Series 66 is only good in conjunction with the Series 7; most states will not sponsor a candidate for the Series 7.  The Series 7/Series 66 combination is generally used by an employee of a brokerage firm who is also registering as an investment adviser.  Essentially, the Series 66 equals the combination of the Series 65 and Series 63 exams.  A sponsor is not required to take either the 65 or 66 exams.  The Series 66 is not valid until you pass the Series 7 exam.

I passed the Series 65; now what?  Just passing the exam is only the first step.  You must complete the registration process before you can solicit accounts. Successful completion of the Uniform Investment Adviser Law Examination does not excuse you of the personal responsibility to know and to abide by the specific requirements of the securities laws and regulations of the states in which you conduct business. Furthermore, although successful completion of the examination may satisfy a portion of the requirements of a particular state, it does not convey the right to transact business prior to obtaining a license from the state to conduct an advisory business.

Capital Management Service Group, Inc. is dedicated to providing the highest quality of services on a personal level and in a timely manner. We offer flat-fee engagements, which include start-to-finish legal services and counsel with all aspects of launching a domestic or offshore hedge fund. No two funds are identical.  We use a client-based approach to our fund structuring and analysis. Our clients routinely comment on the excellence of our personal service and the time we take to properly understand and implement the client’s unique circumstances and objectives. Call Us at +1(307) 213-4732, Email Us and Read What Our Client Say About Us on LinkedIn

Call Us First  We are experts in international hedge funds and tax. Click on any reference below to our leading articles:

Strategic Hedge Fund Planning by Hannah Terhune.  Wilmott Magazine Ltd. (Volume 2013, Issue 63, pages 8-11 January 2013).

Hedge Funds - Limited Partners' Right of Access After Parkcentral Global, L.P., v. Brown Investment Management, L.P. by Jim Brennan.   Cititrust Edge Magazine (4th Quarter 2012).

Strategic Hedge Fund Planningby Hannah Terhune.  Canadian Hedgewatch (March 2012).

Strategic Hedge Fund Planning by Hannah Terhune.  MoneyScience (March 2012)

Hedge Funds - Limited Partners' Right of Access After Parkcentral Global, L.P., v. Brown Investment Management, L.P. by Jim Brennan.  Canadian Hedgewatch (July 2011).

Planning for Cross-Border Financing Arrangements.  Practical International Tax Strategies (May 31, 2011).

U.S.--Tax Traps of Non-U.S. Issuer Debt Offerings.  Practical International Tax Strategies (April 15, 2011).

America the Beautiful Tax Haven.  Cititrust Edge Magazine (1st Quarter 2011).

Offshore Hedge Fund Focus:  Master & Feeder.  Cititrust Edge Magazine (4th Quarter 2010).

U.S.--Cross Border Credit Agreements:  Planning for U.S. Withholding Taxes.  Practical International Tax Strategies (November 15, 2010).

Starting an Offshore Fund.  themanager.org (June 2008).

Mixing Investment Adviser and Brokerage Services.  Hedge Fund Monthly by EurekaHedge.com (October 2007).

Offshore Fund Taxation.  Hedge Fund Monthly by EurekaHedge.com (May 2007).

Forex Trader to Forex Manager.  Offshore Business Magazine (November 2006).

Forex Trader to Forex Fund Manager:  The Path to Success.  Hedge Fund Monthly by EurekaHedge.com (October 2006).

Drafting Hedge Fund Performance Allocations.  Hedge Fund Monthly by EurekaHedge.com (August 2006).

Como Crear su Propio Hedge Fund by Hannah M. Terhune, Eva Porras, Argilio Rodriguez and Garrett Fisher (2006).

Offshore Hedge Funds: Focus on Master/Feeders by Hannah M. Terhune (2006).

Temas Sobre Impuestos de Sociedades Colectivas para Hedge Funds en Paraiso Fiscal by Hannah M. Terhune (2006).

Establish a Marketable Track Record with an Incubator Fund by Hannah M. Terhune (2006).

Must I Register as a Commodity Pool Operator? by Hannah M. Terhune (2006).

Do’s and Don’ts for Crafting Hedge Fund Peformance Allocations by Roger D. Lorence and Hannah M. Terhune. Derivatives:
Financial Products Report (an RIA publication) (September 2005).

Trading Foreign Index Contracts? Know the Tax Rules Before You Trade by Hannah M. Terhune and Roger D. Lorence. Stocks, Futures and Options (June 2005).

Practical Strategies For Section 475(f) Elections by Roger D. Lorence and Hannah M. Terhune. Derivatives Financial Products Report (WG&L/RIA,a Thompson Company) (March 2005).

Forex Hedge Fund Management by Hannah Terhune and Roger D. Lorence.  Currency Trader (March 2005).

Advising Clients on Internet Server Co-Location Agreements, Practical International Tax Strategies (March 15, 2004).

Structuring and Financing International Operations Using Hybrid Entities and Tax-Efficient Financing Practical U.S./International Tax Strategies (Jan. 15, 2004).

Hedge Fund Compensation Arrangements. Practical U.S./Domestic Tax Strategies at Page 18 (Dec. 2003).

U.S. Inbound Investment – The Portfolio Interest Exemption. Practical U.S./International Tax Strategies (Dec. 15, 2003).

Foreign Futures Planning: The 60/40 Question. Practical U.S./International Tax Strategies at Page 12 (Sept. 30, 2003).

Managing Offshore Hedge Funds - A View from the Beach: Practical U.S./International Tax Strategies at Page 9 (June 15, 2003).

Offshore Hedge Funds - Master/Feeder Compliance Issues: Practical U.S./International Tax Strategies at Page 9 (May 15, 2003).

Ready for Help? Please call us (307) 213-4732 or e-mail Hannah Terhune, international hedge fund and tax attorney.

Capital Management Services Group, Inc. is a foremost professional authority in the hedge fund industry.  Ms. Terhune's numerous articles on hedge funds and international tax matters have appeared in publications worldwide. Read Our Leading Media Content and Articles by Hannah Terhune on Hedge Funds and International Tax Planning, Chances are, if you have read (or are reading) anything relating to starting a hedge fund, Ms. Terhune wrote it first. Read Our Client Comments and Read About Hannah Terhune on LinkedIn.  When you consult with us, you have access to a unique and very desirable blend of securities, tax, and business experience. Give us the opportunity to put our knowledge and expertise to work for you. We continuosly provide the highest quality services at competitive rates. Give us a call and let us prove all we can do for you.  You can get answers to your specific questions in a consultation. We are confident that when you are finished with your consultation you will be impressed and more informed about your business plans than before. The views expressed on this website are subject to change based upon new information, new technology, consideration of new perspectives and/or for no reason at all. This website exists for educational purposes and nothing on this website should be considered as legal advice.  Website content and design are copyrighted 2022© by Hannah M. Terhune and all rights are reserved.