Offering Advice & Services to Traders | Investors | Funds
What is a Qualified Client?
Customer Testimonial Hannah and her team were knowledgeable, professional, and a pleasure to work with; having access to their expert help is indispensable in forming an incubator fund or hedge fund entity at a very reasonable cost and time frame. D. Rxxxn December 21, 2011
Qualified Clients and Performance Fees SEC registered (and many state registered) hedge fund managers can charge a performance fee (also referred to as an incentive allocation or performance allocation) only to qualified clients. The performance fee cannot be charged to accredited or non accredited investors. The definition of Qualified Client changed in 2011. Qualified Clients -- New Definition Effective September 19, 2011 On July 12, 2011, the Securities Exchange Commission (the "SEC") ordered changes to the dollar amount thresholds in the "Qualified Client" definition under rule 205-3 of the Investment Advisers Act of 1940. These changes became effective September 19, 2011. Currently, Rule 205-3 issued under the Investment Advisers Act of 1940 defines a qualified client as:
1. A natural person who or a company that has at least $1,000,000 under the management of the investment adviser;
2. A natural person who or a company that the investment adviser reasonably believes has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $ 2,000,000. New Rule Impacts State Registered Investment Advisers Many states (such as California, Pennsylvania, etc...) follow Rule 205-3. As a result, even if your investment adviser firm is state registered (versus SEC registered), the new definition of qualified client will affect you if your state of licensing follows federal law.
Customer Testimonial I would like to state unequivocally that I have had a completely positive experience in dealing with Capital Management Services Group. Truly, from the first phone call that I made to Capital Management, to the conference call that was arranged with Hannah Terhune, the time she took in answering all of my questions, and, finally, to the follow-up by Amy Hong. My case involved the establishment of a Forex Incubator Fund, and was thoroughly handled. Hannah Terhune responded promptly to my subsequent phone calls and Amy Hong is absolutely 100% efficient. I, certainly, plan to enlist Capital Management's services for my legal needs in the future concerning fund management. I would rate my experience and results 5 out of 5 stars! Totally satisfied, Rxxxxxx Sxxxx, Sept. 22, 2010
Hedge Fund Subscription Agreement Explanation of Qualified Client Below are the Qualified Client categories:
Individual or Company with Net Worth In Excess of $2 Million. A natural person or company whose net worth (or, in the case of a natural person, joint net worth with his or her spouse) at the time of entering into this Agreement exceeds $2,000,000. Explanation: In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.
or
Individual or Company with $1,000,000 under Management. A natural person or company who has at least $1,000,000 under the management of the General Partner immediately after entering into this Agreement.
or
Individual or Company who is a Qualified Purchaser under 1940 Act. A natural person or company who is a qualified purchaser as defined in Section 2(a)(51)(A) of the 1940 Act at the time of entering into this Agreement.
or
Executive Officer, Director, Partner etc. of General Partner. A natural person who is an executive officer, director, trustee, general partner, or person serving in a similar capacity, of the General Partner.
or
Employee of General Partner. A natural person who is an employee of the General Partner (other than an employee performing solely clerical, secretarial or administrative functions with regard to the General Partner) who, in connection with his or her regular functions or duties, participates in the investment activities of the General Partner, provided that such employee has been performing such functions and duties for or on behalf of the General Partner, or substantially similar functions or duties for or on behalf of another company, for at least 12 months.
Customer Testimonial Hannah and her team were knowledgeable, professional, and a pleasure to work with; having access to their expert help is indispensable in forming an incubator fund or hedge fund entity at a very reasonable cost and time frame. D. Rxxxn December 21, 2011
Pending SEC Proposals While the July 12, 2011 SEC order increased the dollar threshold amounts, the following proposals are still under consideration by the SEC. Inflation Adjustment of Dollar Amount Thresholds In the proposed rules, the SEC proposed adding a new paragraph (e) to Rule 205-3, providing that the SEC will issue an order every five years adjusting for inflation the dollar amounts of the Assets Under Management Test and the Net Worth Test, as required by the Dodd–Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The SEC stated that the PCE Index will be the inflation index used to calculate future inflation adjustments of the dollar amount tests in the rule. The SEC also stated that it intended to revise subparagraph (d) of Rule 205-3 to reflect any administrative order adjusting dollar amounts. Furthermore, the SEC stated that it anticipated it would delegate to its staff the authority to issue inflation adjustment orders every five years in the future.
Exclusion of the Value of Primary Residence from Net Worth Determination The SEC proposed to amend the Net Worth Test to exclude from the net worth calculation the value of a natural person's primary residence and debt secured by the property. The amendment would only exclude the value of a natural person's primary residence and the amount of debt secured by the property that is no greater than the property's current market value. The debt above the market value would be considered a liability in calculating net worth under the proposed amendment. Transition Rules The proposed rules also provide two transition provisions addressing existing performance fee arrangements. The first of such provisions proposes to grandfather clients who entered into performance fee arrangements that were permissible under the rule at the time they entered into the advisory contract with their investment adviser. It is unclear whether this would also extend to additional investments made by such clients after the effectiveness of the proposed amendments.
The second transition provision proposes to grandfather clients of investment advisers who were previously exempt from registration with the SEC, and provides that the prohibition set forth in Section 205(a)(1) would not apply to contractual arrangements entered into at the time the investment adviser was exempt. This provision may affect investment advisers who are required to register with the SEC for the first time as a result of Dodd-Frank. However, if a previously exempt adviser subsequently registers, the new thresholds would not apply to contracts entered into prior to registration.
Customer Testimonial Hannah, Your article on starting an offshore fund gave me some great insight on the subject and connected the dots very quickly for me. Just wanted to say thanks! Bxxxx Lxxxxx January 28, 2009
Customer Testimonial I wanted to thank you and your staff for the professional and timely services that you provided in setting up a CTA business. As an individual trader for almost 20 years I have a full grasp of markets but had very little knowledge in setting up a trading business for clients. Everyone at your firm was extremely friendlyand helpful in giving me guidance in this new startup. Your prices were fair and while I looked at different firms to handle the process yours was head and shoulders above the rest. Thanks so much, Sxxx Sxxxr Managing Partner Sxxxxx Capital Management LLC. June 18, 2010.
Customer Testimonial Capital Management Services Group and Hannah Terhune have been instrumental in helping me establish a forex fund. I have been particularly impressed with Hannah's willingness from the beginning to advise me on the various options I had, and in helping me chart the appropriate course given my goals. She was very helpful in addressing and answering my many questions and I greatly appreciate her advice. As someone who was launching his first fund, I've greatly appreciated the support I received from her and her staff. I look forward to my ongoing relationship with Hannah Terhune and CMSG.
Why Hire Us? We advise individuals on hedge fund startups worldwide. We are experts on investment adviser law, hedge fund law and forex and managed futures fund law. We handle state investment adviser registrations, SEC investment adviser registrations, U.S. hedge fund formations, foreign hedge fund formations, forex fund startups, managed futures fund startups, commodity pool formations, NFA registrations, international hedge fund formations, and investment manager registrations in many countries.
More Reasons to Hire Us When you engage us for hedge fund you get a unique combination of securities, tax, and international experience, focused on the trader niche. We have established a leadership position with traders. We are one destination for all your very special hedge fund and trader tax needs. We think we have the best set of offering documents based on the current and ever changing federal, state and offshore securities, commodities, and tax laws. We aim and deliver quick turnaround times, because we understand that our customers want to begin their money management business as soon as possible. We conceive, structure, and deploy the best tax saving strategies into your hedge fund vehicle (for the benefit of the manager and their investors) and your management company. Investors value tax-savings strategies and we utilize all our special knowledge and ideas in this area. Our customers value our one-stop relationship. We will help you start your business and continue to assist you. Our tax services division handles accounting, software, and tax compliance, including all tax matters (tax planning and tax returns). Only one thing counts with us and that's our customer relationships!
CapitalManagementServicesGroup.com is recognized by discriminating fund managers and traders as being the foremost tax and legal authority in the business. Attorney Hannah Terhune's education and experience are unsurpassed in the area of hedge funds creation and management platforms, and the complex body of tax laws related thereto. Ms. Terhune's exensive knowledge and experience have made her an indispensable resource for serious fund management and trading professionals. Ms. Terhune's articles on the subjects have appeared in over 100 publications worldwide. Chances are, if you have read about the above matters, Ms. Terhune has written about them. Give us the opportunity to use that knowledge and experience for you. CMSG provides the best services and support needed for hedge fund projects and associated activities in one convenient place, saving you time and energy. No need to coordinate work between different firms; we handle the entire process from start to finish. We offer hedge fund and money management accounting, tax services, tax preparation, consulting, entity and retirement plan formation services. Our professionals provide the highest 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. Read our Customer Testimonials and learn more About Us.
Personal Consultations and Fees You get answers to your specific questions by speaking directly to Hannah Terhune, an experienced hedge fund attorney. Ms. Terhune's hard-earned knowledge and experience can be put to work to save you unnecessary steps and costly wasted effort. The consult is an invaluable opportunity to speak to Hannah one-on-one, and learn how to achieve more in less time. As a result, you can anticipate that the return on your investment will far outweigh the costs associated with our unsurpassed services. Of course, fees are a necessary part of the consultation. Ms. Terhune's credentials reflect an invaluable resource that combines a well-informed professional practitioner with sound ethical judgment that cannot be over-estimated. The expertise required to recommend best solutions and provide sound advice should never be taken lightly. We are confident that when you are finished with your consultation, you will be impressed and more informed about your business plans than ever before. Call (307) 213-4732 or Click Here to Request Services.
Our Commitment Henry David Thoreau wrote: "Do not hire a man who works for money, but him who does it for love of it." We are committed to your business plans and bringing you the best possible options. We are an established and internationally recognized business that serves and educates our clients throughout the industry. We do this by striving for the best results. Above all, we are a law firm. A lawyer is a philosopher and role model. The ability to improve our clients' lives is a privilege that we do not take lightly. There is tremendous power in being able to effect a positive change in our clients' lives. Our aim is to welcome our clients and to provide a comfortable, warm environment for all. We believe that making our clients feel comfortable and confident with the process provides the basis for a constructive relationship built on mutual trust. time. Thanks for visiting our website. We hope to have the opportunity to serve you.
