<p>What's the difference</p>
<p>[Let</a> me google that for you](<a href=“http://lmgtfy.com/?q=hedge+fund+vs+investment+bank]Let”>http://lmgtfy.com/?q=hedge+fund+vs+investment+bank)</p>
<p>Hedge funds and Private Equities are run typically by Investment Advisers like myself. They are partners in the transaction which is the only way they can legally trade with their “clients” (Not clients but partners) without being broker dealers.</p>
<p>Investment Banks are Broker Dealers. The can trade on their own account that mean they can sell shares they own or shares from the market to their clients. Investment banks help private companies go public by underwriting their initial offerings. This is done by purchasing the new shares themselves at a discount and offering them to the market at a market price for profit. That’s and overly simplistic explanation but it will do.</p>
<p>Hedge funds and Private equities are different in that private equities typically invest directly in company’s or projects as part owners. They assist in development and growth using their expertise and network of advisers. Advisers are associates that are either contractors or employees; and heads of their portfolio companies (companies that received VC funding) who collaborate.</p>
<p>Hedge funds have less of a focused investment strategy. Mostly they trade securities:stocks, bonds, commodities, forex, futures, and other derrivatives to take advantage of arbitrage opportunities. They use various complex strategies to hedge their bets. Hedging is a method of risk reduction or mitigation. Hedge funds have more liberal investment policies so, at times, they may be seen acting like private equities.</p>
<p>Investment banks can own their own private equity or their own hedge fund. Hedge funds and most investment advisers manage money by hiring custodians or “prime brokers” to hold the cash and securities. These Broker Dealers follow the money managers instructions for trading his clients assets.</p>
<p>Investment Advisers hold the series 7 and 63(or 66), or just the 65 they can also hold the series 3 for futures and commodities trading. Hedge fund advisers keep the 3 while investment adviser tend to come out of brokerages and hold the 7/63 combo and continue to work fro a broker (the only way to keep the series 7 active). I have a 65, I’m studying for my insurance producers license, and intend to hold a series 3. I have friends who are interested in trading commodities. I don’t work for a broker so holding a 7 is impossible.</p>
<p>I work mostly as a financial planner and wealth manager but I do help with private equity and VC transaction for international trade and development. I also have a opportunity within the next year or two to start commodities trading.</p>
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<p>Eh, not exactly. Hedge funds and Private Equities are broker dealers (they need series 7). They don’t do much investment advise since they mostly deal with institutional investors or high net worth sophisticated investors.
I don’t think you can run a hedge fund or private equity with just a FINRA 65. The advisers, if there are any, are usually BO.
Without series 7, you are essentially a middle man (person).</p>
<p>[What</a> licenses do you need to start or manage a hedge fund? ? Hedge Fund Law Blog](<a href=“http://www.hedgefundlawblog.com/what-licenses-do-you-need-to-start-or-manage-a-hedge-fund.html]What”>What licenses do you need to start or manage a hedge fund? | Hedge Fund Law Blog)</p>
<p>Exactly</p>
<p>Money management requires a 65 or a 7/63 (or 7/66), Even if you manage the accounts of accredited investors. All money managers are investment adviser representatives not necessarily registered reps (aka stock brokers). </p>
<p>A lot of Broker/Dealer firms become registered investment adviser firms but not all investment adviser firms are broker dealers. All private equities and hedge funds are regulated by investment adviser laws whether they have to register their firm or not.</p>
<p>You can’t keep a series 7 unless you work at a broker/dealer. It becomes inactive and you must either work for another broker/dealer or get the 65 (65/63 in some states).</p>
<p>You need a strong GPA.</p>
<p>[Hedge</a> Funds: Introduction](<a href=“http://www1.investopedia.com/university/hedge-fund/]Hedge”>http://www1.investopedia.com/university/hedge-fund/)</p>
<p>Hedge fund Structure and Governance.</p>
<p><a href=“http://www.investopedia.com/articles/financial-careers/09/private-equity.asp[/url]”>http://www.investopedia.com/articles/financial-careers/09/private-equity.asp</a></p>
<p>Tortfeasor, the hedge funds that are mentioned here are different from those I am familiar with. You are talking about a hedge fund manager. I am talking portfolio management, the front office. As a matter of fact, my son works in a hedge fund with $5-10b AUM and they are broker/ dealers .My son had his series 7 when he was in private equity and is keeping it active now.</p>
<p>That makes sense and follows exactly what I was saying.</p>
<p>I’m talking about hedge funds. As I said some B/D’s have hedge funds but most hedge funds are not B/D’s. That’s why prime brokerage is such a big industry. Hedge funds hire prime brokerages to execute their trades.</p>
<p>If your son worked for a B/D who owned a PE or Hedge Fund it makes sense for him to get his 7. But, again, most hedge funds and private equities are not B/D’s. A series 7 can only be active at a B/D.</p>
<p>Even Goldman Sachs has hedge fund departments. That’s going to change. They may restrict banks from owning Hedge finds and from trading on their own account (proprietary trading). Many B/D’s and banks are divesting their hedge fund assets.</p>
<p>Portfolio management is different. That is a function within all three types of company’s. Portfolio’s come in different shapes and sizes. That is not front office unless it’s at a small firm where the manager runs the portfolio and sells it just the same or unless it’s a company like Vanguard or State Street that specializes in mutual funds and ETF’s. Those are investment advisers but they are big enough to be advisers that own their on B/D operation to save money on trading. They may have B/D’s but they don’t do investment banking. they are only interested in trading the assets within their portfolios.</p>
<p>I am intimately familiar with securities laws since I own and operate a registered investment adviser. I perform my own compliance and legal filings (I let a lawyer review my work, of course). I work with B/D’s, banks, custodians, other advisers,etc. I know what I’m talking about because I do it.</p>
<p>The difference between a “registered rep” and an “investment adviser rep” is slight but a really big deal. Neither the SEC, nor the state administrators allow any fudging of the lines. There is no confusion among licensees because any confusion can result in hefty fines, revoked licensees, or prison. It’s not pretty.</p>
<p>Not everyone can or wants to be a FINRA member firm or a member of the NYSE which is what is required to be a B/D. If you don’t you can’t keep an active series 7. It’s a statutory impossibility. The alternative is a 65/63 or just 65. Some states exempt CFP holders. The SEC only cares about the 65 but with our legal system that may not be enough depending on the jurisdiction you operate in. </p>
<p>Morningstar is also required to register as an investment adviser with the SEC. They operate in all 50 states, they give investment advice, and they give most of that advice for a fee. They are an investment advisory that specializes in research and publications. They don’t manage money like me but they are regulated because they give advice for a fee. </p>
<p>Here’s proof from the SEC: [Investment</a> Adviser Search](<a href=“IAPD - Investment Adviser Public Disclosure - Homepage”>IAPD - Investment Adviser Public Disclosure - Homepage)</p>
<p>Just type any company and you will see.</p>
<p>Here’s FINRAs Broker check [FINRA</a> - FINRA BrokerCheck](<a href=“http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm]FINRA”>http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm)</p>
<p>I use these because as a responsible adviser and manager I must verify that any adviser I recommend (like State street, Vanguard), and any Broker I recommend is registered and in good standing with all administrators. That includes hedge funds and private equities for my accredited investors and pension clients.</p>