Regulation of investment companies and hedge funds are not handled by state securities laws, however states may indirectly regulate the funds through regulating the sale of interests in hedge funds.
If a hedge fund chooses not to register with the SEC they may be exempt from state regulatory requirements.
In this guide we hope to outline the hedge fund regulations in each state and provide as much information and as many online resources as possible for each state.
Out Of State Regulations: S.C. Code Ann. § 35-1-403(b)(2): Investment adviser does not include "a person without a place of business in this State if the person has had, during the preceding twelve months, not more than five clients that are resident in this State…."
In State Regulations: Generally no exemptions, according to examiner.
Comments on this regulation: Exemption based on definition of investment adviser and definition of client, where one fund=one client. See S.C. Code Ann. § 35-1-403 for registration requirements and exemptions.
Out Of State Regulations: 70 P.S. § 1-102(j)(vii): Investment Adviser does not include "A person who has a place of business in this State and during the preceding twelve-month period has had not more than five clients in or out of this State and does not hold himself out generally to the public as an investment adviser."
In State Regulations: Yes, exempt, based on examiner's comments.
Comments on this regulation: Exemption based on definition of investment adviser and definition of client, One fund = one client. See 70 P.S. § 1-102(j)(vii) for definition of investment adviser.
Out Of State Regulations: Tenn. Comp. R. & Regs 0780-4-3.05(1)(b): "Any person domiciled in this state who, during the course of the preceding twelve (12) months, has had fewer than fifteen (15) clients and who neither holds himself out generally to the public as an investment adviser nor acts as an investment adviser to any investment company registered under the Investment Company Act" is exempt from registration requirements.
In State Regulations: Exempt, based on examiner's reference to Tenn. Comp. R. & Regs 0780-4-3.05(1)(b)
Comments on this regulation: Exemption based on an exemption to the registration requirements. Still may be subject to other rules applying to investment advisers. See Tenn. Comp. R. & Regs 0780-4-3.05 for exemptions.
Out Of State Regulations: Kan. Stat. Ann. § 17-12a405: The following persons are exempt from the registration requirements: ….(D)(2) a person without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state….
In State Regulations: No exemption, based on examiner's comments.
Comments on this regulation: Exemption based on an exemption to the registration requirements. Still may be subject to other rules applying to investment advisers. See Kan. Stat. Ann. § 17-12a405 for registration requirements and exemptions.
Out Of State Regulations: Ohio Admin. Code 1301:6-3-01(K)(1)(a): "Investment adviser” does not mean any person who, during the course of the preceding twelve months "[h]as had fewer than fifteen clients…."
In State Regulations: Yes, based on Ohio Admin. Code 1301:6-3-01(K).
Comments on this regulation: Exemption based on definition of investment adviser and definition of client, one fund = one client. See Ohio Admin. Code 1301:6-3-01(K) for exemptions.
Out Of State Regulations: The State of Wyoming has not promulgated a state investment adviser registration requirement; therefore all Wyoming-based investment advisers are required to register under the Advisers Act with the SEC via the IARD.
In State Regulations: The State of Wyoming has not promulgated a state investment adviser registration requirement; therefore all Wyoming-based investment advisers are required to register under the Advisers Act with the SEC via the IARD.
Out Of State Regulations: Nev. Rev. Stat. § 90.340: 1. The following persons are exempt from licensing: (a) An investment adviser who is registered or is not required to be registered as an investment adviser under the Investment Advisers Act of 1940 if…(3) The investment adviser has no place of business in this State and during any 12 consecutive months it does not direct business communications in this State to more than five present or prospective clients….
In State Regulations: Generally, no exemption, unless hedge fund meets the requirements of Nev. Rev. Stat. § 90.340 (1)(a)(1).
Comments on this regulation: Exemption based on an exemption to the registration requirements. Still may be subject to other rules applying to investment advisers. See Nev. Rev. Stat. § 90.340 (1)(a)(1) for exemptions.
