Monday, July 18, 2011

How do hedge funds employ non-registered or not licensed people to raise money for the funds?

I have friends that call themselves employees or external promoters or other names along those lines that get paid or bonuses or compensated based on bringing in new investors to a hedge fund. I am pretty sure they only go after their personal sphere of influence and who those people make personal introductions to them and they are all always accredited investors but I do know that they all work for different hedge funds, none of them have any registration or licenses have never worked at traditional investment places. They just solely jumped in to this arena based on great payouts for any monies they bring in to the hedge funds they work for. In doing some research this seems illegal to me. I am going to assume I am wrong here as this sounds like it is very common and the way a lot of hedge funds raise money. How is it possible? what is it that I am missing that allows them to have the ability to do this and get paid for it without having to be investment advisors or something like that. I know hedge funds are outside the SEC hence why you must go with accredited investors, but I am still just unclear on how this works and why it does. All else I have read makes me feel like you have to be registered to do this. Someone please clear this all up for me and/or point me to some places that explain this. Thanks so much!

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