hfm focus hedge fund marketing cess internally. Since this can be a burdensome venture, other managers have elected to affiliate with third-party broker-dealers to meet these requirements. Typically in this type of set-up, the third-party broker-dealer acts as placement agent for the fund offerings. The relevant investment adviser employees become licensed with the third-party broker-dealer as a registered representative. This allows those individuals to market the hedge fund and be compensated based on capital they have raised, while allowing the third-party broker-dealer to provide all the compliance oversight required by Finra. Since Blass’s comments a year ago, we’ve seen heightened awareness to this issue.

Because ALPS has a brokerdealer approved for private placement activity and has been overseeing the activities of hundreds of registered representatives for decades, we’ve been in a unique position to get a feel for industry sentiment. It seems with the SEC focusing on investment adviser marketing activities, a number of hedge fund managers have taken a closer look at their own staff and are re-addressing broker-dealer registration requirements. 24 h f m w e e k . co m This is a trend that has been increasing and does not seem to be slowing down any time soon.

It would be prudent for any hedge fund manager that is unsure of their situation to speak with their attorney about potential li- It would be prudent for any hedge fund manager that is unsure of their situation to speak with their attorney about potential liability issues ” ability issues. With at least one major enforcement action against a private fund adviser in the past 12 months, it appears the discussion is not simply an academic one, but a valid area of concern that needs to be addressed. n 3 -9 a p r 2 014 .