No - registration required
Qualified clients
Yes
No
Disclaimer
Summary
Unsurprisingly, Montana has almost no hedge fund industry, and the state does not provide for any exemption framework for investment advisers, making Montana a relatively unfriendly jursidction for emerging managers.
Montana specific adviser rules
Montana has no exemption framework; fund managers must be registered investment advisers.
Investor restrictions
Investors in private funds must be "qualified clients" in order to be assessed performance-based fees.
Reporting requirements
RIA-advised funds with performance fees are restricted to accredited investors that are also "qualified clients" ($2.2m+ net worth).
Audit requirements
An annual, third-party audit is required for any private fund operated by an investment adviser.
State-specific nuances
None of note.
Detailed Summary
Montana has not implemented any exemption framework for private fund advisers. This makes Montana 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 Montana 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.
