Below is a recent question that I have received often via email:What licenses should a hedge fund marketer hold? I have heard that one should have their series 7 and series 66, is this true? Also, what licenses should I hold if I am going to be marketing my firms separate account business and mutual fund as well as their hedge fund? Thanks.
My response below:
Hello XXX,
I don't think you will find many responses to your question online - most professionals are afraid of being seen as providers of legal or license-based advice over the internet. I would check with a broker-dealer, security lawyer or compliance officer in the industry for your exact situation.
That said, in the past I have had one employer swear up and down that you hardly ever need a securities license to market the investment funds he worked with...but most professionals that I work with agree that you do need to be licensed for most types of work. The more professional and established a group is, the more likely they will be licensed. Why loose an account or client over not being licensed?
Hope this helps - good luck and lets keep in touch.
- Richard
Read more about hedge fund marketing within our Guide to Hedge Fund Marketing & Sales or learn more about third party marketing by visiting http://ThirdPartyMarketing.com.
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1 comment:
In order to market a hedge fund as a third party marketer you are required to be registered to sell securities and the fund needs to have a selling agreement with the broker dealer with whom the salesman is registered. Even though hedge funds are private offerings they are still securities and subject to certain aspects of state and federal securities regulations. However, and this may be the reason why there is some confusion about this issue, there is also what is known as an issuer exemption which basically means that if you are the issuer of the security then you do not need to be registered to sell that security. So if you and I are the principals of the GP of a fund then we can sell that fund without being registered as securities brokers because we are employees of the issuer of the security. It is also important to understand that you cannot get around the requirement merely by calling a salesman an employee of your firm. They must truly be an employee and if they are paid on commissions they probably do not qualify as an “employee” for purposes of the issuer exemption. I must also add the caveat that I am not a securities lawyer but if you check with one I think you will find that the above is correct.
- Frank Franiak
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