No - registration required
Standard RIA restrictions
No
No
Disclaimer
Summary
Private fund adviser rules in HI
With Hawaii’s low population, de minimus financial industry, and extreme time zone offset from market hours, unsurprisingly, there are very few hedge funds in Hawaii. There is no exemption framework in Hawaii and a private fund adviser based there must become a state registered investment adviser.
Hawaii specific adviser rules
Hawaii does not have an exemption framework; fund managers must be registered investment advisers.
Investor restrictions
RIA-advised funds with performance fees are restricted to accredited investors that are also "qualified clients" ($2.2m+ net worth).
Reporting requirements
Registration as an RIA and state notice filing by way of Form ADV is required.
Audit requirements
RIA-advised funds must receive a annual, third-party audit, which must be shared with investors.
Detailed Summary
Even if a fund manager wanted to operate on a five hour offset from market hours, Hawaii has not implemented any exemption framework for private fund advisers. This makes Hawaii a relatively more challenging state to be an emerging manager in, in the sense that the minimum operating cost and administrative burden of being an emerging manager is higher than that of states that do have an exemption framework. There are approximately 5-10 states with a similar framework (or lack thereof).
Because advisers based in Hawaii must be registered investment advisers, advisers must take into account the licensure requirements (which may entail, for example, the holding of the FINRA Series 65) and the cost of RIA registration (typically through a law firm and costing between $15,000 and $30,000 on the lower end), as well as ongoing RIA compliance costs each year.
Restrictions for state registered RIAs with respect to private funds generally entail being restricted to qualified clients (if performance related compensation is desired), having each fund undergo an annual audit, and possibly other, state-specific RIA requirements around reporting and custody. This article does not contemplate state-specific RIA requirements, and any such advisers should seek the guidance of counsel.
Repool can still be utilized for fund launch by RIAs, but Repool does not generally assist with RIA registration or RIA-specific ongoing complaince, and additional such services alongside Repool’s services will be required.
