# Hedge Fund Formation: Limited Partnership Agreements and Private Placement Memoranda[^about] A plain-language guide for hedge fund managers, and for the smaller investors they admit, to a U.S. hedge fund's limited partnership agreement and private placement memorandum, covering parties, performance fees, withdrawals, manager protections, offering exemptions, investor eligibility, disclosures, and filings. Hedge fund formation combines entity law, securities law, adviser regulation, tax, and negotiated economics. A hedge fund is an open-end private fund: investors contribute capital when they subscribe and can withdraw it periodically. This guide covers U.S. hedge funds; private equity and other closed-end drawdown funds work differently and are not covered here. It is written first for the manager of an emerging or small hedge fund, who can use it to identify the questions the fund's documents must answer and then work with fund counsel on the answers for the particular fund. It is written second for a smaller investor who may not have counsel of their own: the same questions show what a hedge fund's documents let the manager charge, change, or withhold, and where an investor's rights depend on a notice period, a vote, or the manager's discretion. ## What is the purpose of a hedge fund limited partnership agreement? {#hedge-fund-limited-partnership-agreement-purpose} **Short answer.** A hedge fund limited partnership agreement (LPA) is the contract that sets the fund's key legal terms and mechanics, including how profits are split between the general partner and the investors, what management fees are charged, and when investors may withdraw. [^sec-lpa] A hedge fund is a type of private fund. [^sec-hedge] [^inv-hedge] A private fund pools money from several investors without registering as an investment company. [^sec-private-definition] The SEC's staff describes the role of a limited partnership agreement this way: "if you structure your private fund as a limited partnership, a limited partnership agreement, or LPA, will document the fund’s key legal terms and mechanics."[^sec-lpa] [^sec-lpa] The [Hedge Fund Limited Partnership Agreement](/templates/openagreements-hedge-fund-limited-partnership-agreement) is one such agreement for a hedge fund. Delaware law gives maximum effect to freedom of contract, so the terms of a Delaware limited partnership agreement, rather than an assumed industry norm, largely govern the fund. [^delaware-lpa-contract-policy] A limited partnership agreement can expand, restrict, or eliminate the partners' duties, but it cannot eliminate the implied covenant of good faith and fair dealing. [^delaware-lpa-duty-terms] ## Who are the parties to a hedge fund limited partnership agreement? {#hedge-fund-limited-partnership-agreement-parties} **Short answer.** A hedge fund limited partnership agreement binds the fund's general partner, which manages the fund, and its limited partners, the investors who commit capital to it. [^sec-gp] [^sec-lp] The SEC staff’s glossary describes a general partner as the person or entity that raises money and manages a limited partnership fund. [^sec-gp] It says, "A limited partner is an investor who commits capital to a private fund."[^sec-lp] [^sec-lp] Delaware law permits classes of limited partners with different rights. [^delaware-lpa-classes] The SEC’s staff says a fund may have a separate adviser. [^sec-adviser] An investment management agreement often governs the adviser’s responsibilities. [^sec-ima] ## Does a hedge fund manager need to register as an investment adviser? {#hedge-fund-manager-investment-adviser-registration} **Short answer.** A hedge fund manager generally must register as an investment adviser with the SEC or a state securities regulator unless an exemption applies, such as the exemption for a U.S. adviser that acts solely for qualifying private funds and manages less than $150 million in private-fund assets. [^adviser-registration-baseline] [^private-fund-adviser-exemption] The SEC's staff states the baseline this way: "Private fund advisers are generally investment advisers that are required to register with the SEC or applicable state securities regulators as a registered investment adviser, unless they are exempt from applicable registration requirements (for example, as an exempt reporting adviser)."[^adviser-registration-baseline] [^adviser-registration-baseline] An exempt adviser still has obligations. The SEC's glossary explains: "While exempt reporting advisers are not registered with the SEC, they are still subject to specific reporting requirements and certain other Investment Advisers Act and federal rules, and they also may be subject to state filing or registration requirements."[^sec-glossary-exempt-reporting-adviser] [^sec-glossary-exempt-reporting-adviser] Whether a manager is registered or required to be registered also decides whether the custody rule and the performance-fee restriction discussed elsewhere in this guide apply to it. ## What should a hedge fund agreement say about performance fees? {#hedge-fund-performance-fees} **Short answer.** A hedge fund agreement states the performance fee, which a limited partnership agreement filed with the SEC for Third Point Enhanced sets at 20 percent of each investor's net increase after the management fee and any loss-recovery balance, reallocated to the general partner. [^third-point-filed-performance-allocation] The SEC's glossary gives the plain meaning: "Performance fees are compensation provided to an adviser based on the performance of a client’s portfolio."[^sec-glossary-performance-fees] [^sec-glossary-performance-fees] A limited partnership can take the fee as a performance allocation, meaning a share of each investor's gains moves from that investor's capital account to the general partner. [^third-point-filed-performance-allocation] The gains measured can include both realized gains, on investments the fund has sold, and unrealized gains, on investments it still holds, as a limited partnership agreement filed with the SEC for The Lion Fund II provides. [^lion-filed-realized-unrealized] Investor.gov, the SEC's investor-education site, describes typical hedge-fund terms: "In addition, they also typically pay a performance fee of 15-20% of the hedge fund’s profit subject to certain measures, such as a high-water mark and a hurdle rate, which can limit when a manager is entitled to performance fees."[^inv-fee] [^inv-fee] ## What should a hedge fund agreement say about hurdles and high-water marks? {#hedge-fund-hurdles-and-high-water-marks} **Short answer.** A hedge fund agreement states whether the performance fee applies only to gains above a hurdle rate and whether a high-water mark or loss carryforward requires earlier losses to be recovered before a new fee is charged. [^lion-hurdle-and-loss-carryforward] [^third-point-loss-recovery] A hurdle is a minimum return the investor keeps before the manager shares in gains. A high-water mark, or loss carryforward, means the manager takes no new performance fee until the investor's earlier losses are made up. Investor.gov explains why both matter to an investor: they "can limit when a manager is entitled to performance fees"[^inv-fee-hurdles]. [^inv-fee-hurdles] Limited partnership agreements filed with the SEC use both tools in different forms. The Lion Fund II agreement charges 25 percent of the increase that exceeds a hurdle rate, subject to a loss carryforward. [^lion-hurdle-and-loss-carryforward] The Third Point Enhanced agreement subtracts the investor's loss recovery account balance before calculating its 20 percent allocation. [^third-point-loss-recovery] ## Who can be charged a hedge fund performance fee? {#who-can-be-charged-a-hedge-fund-performance-fee} **Short answer.** An adviser registered or required to be registered with the SEC may charge a performance fee to an investor in a hedge fund relying on section 3(c)(1) only if that investor is a qualified client under Rule 205-3. [^qualified-client-statutory-baseline] [^qualified-client-rule] The restriction does not apply to an advisory contract with a fund relying on section 3(c)(7). [^advisers-act-205-b-4] For contracts governed by the SEC's June 29, 2026 order, a client qualifies with at least $1.4 million under the adviser's management immediately after entering the contract, or with a net worth of more than $2.7 million immediately before. [^qualified-client-current-order] In a private investment company, each equity owner charged the fee is treated as the client, and an owner not charged it is not. [^qualified-client-pooled-fund-lookthrough] So the rule limits who may be charged. It does not itself require a fund to turn away an investor who will not be charged. Some fund documents, including the [Hedge Fund Limited Partnership Agreement](/templates/openagreements-hedge-fund-limited-partnership-agreement), still require every investor to be a qualified client, as a contractual choice rather than a legal requirement. ## What should a hedge fund agreement say about lock-ups and withdrawals? {#hedge-fund-lock-ups-and-withdrawals} **Short answer.** A hedge fund agreement states when an investor may first withdraw, how much notice a withdrawal needs, and when the general partner may cap or pause withdrawals. [^stilwell-filed-lock-up] [^solasglas-filed-notice] [^apollo-filed-withdrawal-gate] [^apollo-filed-suspension] A lock-up delays the first date on which an investor may withdraw. [^stilwell-filed-lock-up] A notice period sets how far ahead a withdrawal request must arrive. [^solasglas-filed-notice] A gate caps the total withdrawals the fund pays for a period. [^apollo-filed-withdrawal-gate] A suspension pauses withdrawals in stated circumstances, such as a market closure. [^apollo-filed-suspension] Investor.gov describes the usual picture for hedge funds: "Hedge funds typically limit opportunities to redeem, or cash in, your shares to four times a year or fewer."[^inv-redeem] [^inv-redeem] Limited partnership agreements filed with the SEC show a wide descriptive range. One bars withdrawals until the second anniversary of each investment, and another lets the general partner cap aggregate withdrawals in a calendar month at 10 percent of net asset value. [^stilwell-filed-lock-up] [^apollo-filed-withdrawal-gate] Delaware law separately prohibits a distribution that would make the limited partnership insolvent, meaning that its liabilities, other than what it owes partners for their partnership interests, would exceed the fair value of its assets. [^delaware-distribution-solvency-limit] That limit is section 17-607(a) of the Delaware Revised Uniform Limited Partnership Act, and it applies whatever the agreement's withdrawal terms say. [^delaware-distribution-solvency-limit] ## What should a hedge fund agreement say about capital accounts, side pockets, and new issues? {#hedge-fund-capital-accounts-side-pockets-and-new-issues} **Short answer.** A hedge fund agreement keeps a capital account for each partner that records the partner's share of the fund's net profit or loss, and it says how side-pocket investments and initial public offering shares, called new issues, are kept apart from the main portfolio. [^capital-account-filed-net-increase] [^capital-account-filed-designated-security] [^solasglas-filed-new-issues] A capital account is a running balance for one partner. An amount credited to the account is added to that balance, and an amount debited is subtracted. The SEC's glossary explains how gains are shared: "Investors generally share in the profits and losses in proportion to their interest in the fund."[^sec-pooled] [^sec-pooled] The profit and loss can include unrealized gains and losses on investments the fund still holds, as a limited partnership agreement filed with the SEC for The Lion Fund II provides. [^lion-filed-realized-unrealized-2] A performance allocation then moves a share of a partner's gains from that partner's capital account to the general partner. [^capital-account-filed-net-increase] A side pocket holds an investment apart from the rest of the portfolio. One limited partnership agreement filed with the SEC creates a separate sub-account for each partner that participates in an investment designated for that treatment. [^capital-account-filed-designated-security] New issues are shares sold in an initial public offering. FINRA Rule 5130 generally bars a broker-dealer from selling new issues to an account in which a restricted person has a beneficial interest. [^finra-new-issue-restriction] Limited partnership agreements filed with the SEC respond by allocating new-issue profits and losses only as FINRA's rules permit. [^lion-filed-new-issues] [^solasglas-filed-new-issues] ## What should a hedge fund agreement say about duties, exculpation, and indemnification? {#hedge-fund-manager-duties-exculpation-and-indemnification} **Short answer.** A hedge fund agreement states the manager's duties, when exculpation excuses the manager from paying damages, and which claims the fund pays through indemnification, within Delaware's limits on modifying duties and liability. [^delaware-duty-modification] [^delaware-liability-limitation] Investor.gov states the baseline: "Hedge funds . . . are subject to the same prohibitions against fraud as are other market participants, and their managers owe a fiduciary duty to the funds that they manage."[^inv-duty] [^inv-duty] Delaware's partnership statute separately addresses the duties owed under Delaware law: a partnership agreement can expand, restrict, or eliminate them, but it cannot eliminate the implied covenant of good faith and fair dealing. [^delaware-duty-modification] Delaware also preserves liability for bad-faith violations of that covenant. [^delaware-liability-limitation] Exculpation addresses damages owed by a covered person; indemnification addresses covered claims or costs paid by the fund. A Carlyle LPA filed with the SEC defines disabling conduct to include fraud, bad faith, willful misconduct, gross negligence, and willful material breach. [^carlyle-filed-disabling-conduct] That list illustrates one sponsor’s choice. ## What should a hedge fund agreement say about expenses, valuation, and reporting? {#hedge-fund-expenses-valuation-and-reporting} **Short answer.** A hedge fund agreement identifies which expenses the fund pays and any cap on them, who values the portfolio, and which financial reports investors receive. [^third-point-filed-expense-cap] [^solasglas-filed-general-partner-valuation] [^apollo-filed-quarterly-statements] Limited partnership agreements filed with the SEC show an expense cap using manager reimbursement above 1.75% of average net assets and another limiting expenses to 1.25% of net assets subject to exclusions. [^third-point-filed-expense-cap] [^endowment-filed-expense-cap] The SEC’s examination staff observed advisers charging funds for expenses their agreements did not permit. [^risk-expense] The staff also observed valuations contrary to disclosed methods and sometimes resulting in fee overcharges. [^risk-value] ILPA, an association of institutional investors, describes organizational expenses as legal, administrative, and compliance costs of private equity fund formation historically borne by limited partners. [^ilpa-definition] As an investor-side recommendation for private equity, ILPA proposes a cap at the lower of five basis points of target assets under management or $10 million. [^ilpa-cap] That proposal is not a legal requirement or a claim about market practice. ## What should a side letter to a hedge fund limited partnership agreement say? {#hedge-fund-side-letters} **Short answer.** A side letter to a hedge fund limited partnership agreement is a separate agreement giving one investor rights that other investors do not receive, and limited partnership agreements filed with the SEC expressly permit them. [^third-point-filed-side-letters] [^apollo-filed-other-agreements] A well-known, uncontroversial model is the National Venture Capital Association's [Management Rights Letter](/templates/nvca-management-rights-letter), which a venture fund asks each portfolio company to sign to build its case for an exemption from the ERISA plan-asset rules. [^nvca-purpose] The example shows why a side letter can be a benign tool. The right it grants serves one investor's own regulatory position rather than improving that investor's economics. Under the Labor Department's plan-asset regulation, a venture capital operating company must hold investments that carry management rights, which the regulation defines this way: "The term ‘management rights’ means contractual rights directly between the investor and an operating company to substantially participate in, or substantially influence the conduct of, the management of the operating company."[^erisa-rights] [^erisa-rights] Limited partnership agreements filed with the SEC expressly let the general partner enter into separate agreements with particular limited partners, including agreements that alter or supplement the main agreement's terms for that partner. [^third-point-filed-side-letters] [^apollo-filed-other-agreements] Disclosure is the check on side letters. The SEC's examination staff reported advisers that gave select investors side letters with preferential liquidity terms without adequately disclosing them, so other investors were unaware of the potential harm. [^risk-side] ## What's the process for amending a hedge fund limited partnership agreement? {#amending-a-hedge-fund-limited-partnership-agreement} **Short answer.** A hedge fund limited partnership agreement sets the investor vote needed to amend it and may let the general partner make narrower amendments alone. [^stilwell-filed-amendment-power] [^seidman-filed-amendment-threshold] The SEC staff’s glossary says an LPA governs the limited partner’s relationship with the fund and general partner. [^sec-lp-2] Limited partnership agreements filed with the SEC use different voting and manager-only amendment mechanisms. [^stilwell-filed-amendment-power] [^seidman-filed-amendment-threshold] A Stilwell agreement allows general-partner amendments subject to an adverse-effect condition. [^stilwell-filed-amendment-power] A Seidman agreement uses a capital-based investor threshold for other amendments. [^seidman-filed-amendment-threshold] A Lion Fund II agreement requires the general partner and limited partners owning at least 51 percent of interests, and allows consent by silence after notice. [^lion-filed-amendment-threshold] The governing LPA determines the vote, class rights, and notice process. ## What should a hedge fund agreement say about dissolution? {#hedge-fund-dissolution} **Short answer.** A hedge fund agreement says what happens when the fund dissolves, and a limited partnership agreement filed with the SEC for Stilwell Value Partners has the general partner liquidate the fund or appoint a liquidator. [^stilwell-filed-liquidation-on-dissolution] The SEC staff’s glossary says an LPA governs a limited partner’s relationship with the fund and general partner. [^sec-lp-3] In a Stilwell agreement filed with the SEC, the general partner liquidates the partnership or appoints a liquidator after dissolution. [^stilwell-filed-liquidation-on-dissolution] For an adviser using the custody rule’s pooled-vehicle audit route, the rule calls for an audit upon liquidation and prompt distribution of audited statements afterward. [^custody-rule-annual-audit] ## What is a private placement memorandum (PPM), and why do hedge funds use one? {#what-is-a-private-placement-memorandum} **Short answer.** A private placement memorandum (PPM) is the detailed disclosure document a hedge fund gives potential investors in an offering that relies on an exemption from SEC registration, such as Securities Act section 4(a)(2) or Regulation D Rule 506. [^sec-ppm-definition] [^ppm-private-offering-statute] [^ppm-rule-506-safe-harbor] The fund's adviser may not make an untrue statement of a material fact, or leave out a material fact needed to keep its statements from misleading, to any investor or prospective investor. [^ppm-antifraud-rule] The SEC's staff describes the documents for a private fund's capital raise this way: "an offering document—frequently called a private placement memorandum—that acts as a detailed disclosure document for potential investors"[^sec-ppm-definition]. [^sec-ppm-definition] Neither section 4(a)(2) nor Rule 506 prescribes a PPM or its contents, so the document's shape is a matter of disclosure practice. [^ppm-private-offering-statute] [^ppm-rule-506-safe-harbor] A PPM explains the strategy, economics, liquidity, conflicts, and risks before an investor subscribes. The limited partnership agreement, not the PPM, creates the investor's rights, and a limited partnership agreement filed with the SEC for Seidman Investment Partnership II makes the agreement control over any conflicting offering memorandum. [^seidman-filed-offering-memorandum-conflict] ## How can I check that a hedge fund's PPM and limited partnership agreement say the same thing? {#checking-a-hedge-fund-ppm-against-its-limited-partnership-agreement} **Short answer.** A hedge fund's PPM and limited partnership agreement match when the PPM's description of each material term matches the agreement provision that controls it. [^reconciliation-seidman-conflict] [^reconciliation-antifraud-rule] A comparison covers fees, allocations, expenses, eligibility, withdrawals, side letters, amendments, and dissolution. A limited partnership agreement filed with the SEC for Seidman Investment Partnership II makes the agreement control over a conflicting offering memorandum, but that clause does not change what the PPM told investors, and an adviser's statements in a PPM remain subject to the antifraud rule. [^reconciliation-seidman-conflict] [^reconciliation-antifraud-rule] The SEC examination staff describes Rule 206(4)-8 as prohibiting material misstatements and misleading omissions to investors and prospective investors. [^risk-rule] ## How do Rule 506(b) and Rule 506(c) differ? {#rule-506b-vs-rule-506c} **Short answer.** Rule 506(b) bars general solicitation of a hedge fund's investors, while Rule 506(c) permits it if every purchaser is accredited and the fund takes reasonable steps to verify that status. [^offering-general-solicitation-limit] [^offering-rule-506c] [^offering-rule-506c-verification] The SEC staff’s glossary calls section 4(a)(2) the private-placement exemption and describes Rule 506(b) and Rule 506(c) as pathways. [^sec-4a2] Rule 506(b) permits up to 35 non-accredited purchasers in a 90-day period when they have the required knowledge or purchaser representative. [^offering-rule-506b-purchasers] Selling to a non-accredited purchaser also triggers specified information requirements. [^offering-nonaccredited-information] Rule 506(c) allows broader solicitation only with accredited purchasers and reasonable verification. [^offering-rule-506c] [^offering-rule-506c-verification] Both Rule 506 paths retain resale restrictions and bad-actor disqualification. [^offering-resale-limit] [^offering-bad-actor-disqualification] ## What is the difference between a 3(c)(1) fund and a 3(c)(7) fund? {#section-3c1-vs-section-3c7-funds} **Short answer.** A hedge fund relying on section 3(c)(1) of the Investment Company Act may have no more than 100 beneficial owners, while one relying on section 3(c)(7) may be owned only by qualified purchasers. [^private-fund-section-3c1] [^private-fund-section-3c7] Neither exclusion is available to a fund making a public offering. [^private-fund-section-3c1] [^private-fund-section-3c7] The SEC's glossary defines private funds by these two exclusions: "A private fund is a pooled investment vehicle that is excluded from the definition of investment company by Section 3(c)(1) or 3(c)(7) of the Investment Company Act—commonly referred to as a 3(c)(1) Fund or a 3(c)(7) Fund."[^sec-glossary-private-fund] [^sec-glossary-private-fund] The SEC staff explains that an investment company includes an issuer primarily engaged in investing, reinvesting, or trading securities. [^fast-company] "These companies are commonly known as ‘private investment companies.’ Some private investment companies are commonly known as ‘hedge funds.’"[^fast-private] [^fast-private] The 3(c)(1) count has a look-through rule for certain company investors. [^private-fund-section-3c1-lookthrough] Accredited investor is a Regulation D sale-eligibility status. [^investor-gate-accredited-investor] Qualified purchaser is the 3(c)(7) ownership status; for a natural person it generally requires at least $5 million in investments. [^investor-gate-qualified-purchaser] Qualified client is a separate performance-compensation status. [^exclusions-qualified-client-rule] ## Do anti-fraud rules apply to a hedge fund offering? {#anti-fraud-rules-for-hedge-fund-offerings} **Short answer.** Federal anti-fraud rules apply to a hedge fund offering even though it is exempt from registration, so material misstatements and misleading omissions in its offering documents can create liability. [^sec-antifraud] [^antifraud-securities-act-section-17a] [^antifraud-rule-10b5] [^pooled-vehicle-antifraud-rule] The SEC’s staff says, "Antifraud provisions of the federal securities laws broadly apply to all funds and advisers, whether or not they are otherwise subject to or required to register under other provisions of the federal securities laws."[^sec-antifraud] [^sec-antifraud] Securities Act section 17(a) governs fraud in offers and sales. [^antifraud-securities-act-section-17a] Exchange Act Rule 10b-5 governs deceptive statements and conduct in purchases or sales. [^antifraud-rule-10b5] Rule 206(4)-8 separately governs an adviser’s statements to pooled-vehicle investors and prospective investors. [^pooled-vehicle-antifraud-rule] ## What is Form D, and when is it filed? {#form-d-filing} **Short answer.** Form D is an SEC notice for a Regulation D offering, ordinarily filed within 15 days after the first investor becomes irrevocably contractually committed to invest. [^sec-form] [^form-d-filing-rule] The SEC states that a deadline falling on a Saturday, Sunday, or holiday moves to the next business day. [^sec-form] Rule 503(a) supplies the notice requirement. [^form-d-filing-rule] The SEC staff says a Regulation D offering does not itself exempt a placement agent from broker-dealer registration. [^placement-agent-reg-d-not-exempt] Solicitation, negotiation, and transaction-based compensation are among staff registration indicators. [^placement-agent-registration-indicators] ## What is the purpose of strategy disclosure in a hedge fund PPM? {#hedge-fund-ppm-strategy-disclosure} **Short answer.** Strategy disclosure in a hedge fund PPM explains how the fund seeks returns and which investments or techniques create its main exposures. [^inv-strategy] [^inv-leverage] Investor.gov advises reading the offering memorandum to understand investment-strategy risk. [^inv-strategy] It describes leverage, derivatives, and short selling as techniques that magnify outcomes. [^inv-leverage] A strategy description covers the fund’s instruments, markets, concentration, leverage, and investment limits. When a fund trades commodity interests, its operator’s commodity pool operator status may require registration or an exemption. [^nfa-cpo-status] Compensated advice on those interests can separately implicate commodity trading advisor status. [^nfa-cta-status] The NFA describes electronic exemption notices and annual affirmation for specified exemptions. [^nfa-exemption-filing] [^nfa-exemption-affirmation] ## What is the purpose of risk-factor disclosure in a hedge fund PPM? {#hedge-fund-ppm-risk-factors} **Short answer.** Risk-factor disclosure in a hedge fund PPM explains how strategy and operations could cause investor loss, with material statements subject to the pooled-vehicle antifraud rule. [^inv-leverage-2] [^strategy-antifraud-rule] Investor.gov says leverage and speculative techniques magnify possible gains and losses. [^inv-leverage-2] Risk factors can identify financing withdrawal, short squeezes, illiquid positions, counterparty default, valuation uncertainty, and withdrawal limits when those risks fit the fund. Rule 206(4)-8 prohibits an adviser’s material misstatements and misleading omissions to investors or prospective investors in a pooled vehicle. [^strategy-antifraud-rule] ## What is the purpose of conflicts-of-interest disclosure in a hedge fund PPM? {#hedge-fund-ppm-conflicts-of-interest} **Short answer.** Conflicts disclosure in a hedge fund PPM identifies interests that could pull the adviser away from the fund’s interests and explains them sufficiently for informed consent. [^risk-conflict] The SEC examination staff says an adviser must eliminate or fully and fairly disclose conflicts that could affect disinterested advice. [^risk-conflict] The staff observed inadequate disclosure about allocation of investments among private funds and other clients. [^risk-alloc] A PPM can describe allocation methods, affiliated service providers, proprietary trading, side letters, and expense sharing when relevant. These examples are disclosure subjects, not a fixed statutory checklist. ## What should a hedge fund PPM say about service providers? {#hedge-fund-ppm-service-providers} **Short answer.** A hedge fund PPM names the fund's service providers and says what each one does, as a registered fund's memorandum filed with the SEC does for its administrator and its legal counsel. [^constitution-administrator] [^constitution-counsel] A PPM can also disclose the manager's registration status, which the question on adviser registration above explains. A memorandum filed with the SEC names its counsel with counsel's address and says whom counsel represents. [^constitution-counsel] For an adviser registered or required to be registered, the custody rule treats a general partner's legal ownership of or access to client assets as custody. [^custody-rule-scope] [^custody-rule-general-partner] The rule's pooled-vehicle audit route calls for annual audits and delivery of audited financial statements within 120 days after fiscal year-end. [^custody-rule-annual-audit-2] Investor.gov advises investors: "You should understand how a hedge fund determines the value of its holdings and the extent to which a fund’s holdings are valued by independent sources."[^inv-value-2] [^inv-value-2] ## What should a hedge fund PPM say about taxes? {#hedge-fund-ppm-taxes} **Short answer.** A hedge fund's private placement memorandum (PPM) describes how the fund expects to be taxed, as a memorandum filed with the SEC does when it states that its fund will be classified as a partnership for U.S. federal income tax purposes. [^constitution-tax-classification] The SEC's staff describes a PPM as "an offering document—frequently called a private placement memorandum—that acts as a detailed disclosure document for potential investors"[^sec-ppm-definition-tax]. [^sec-ppm-definition-tax] What a tax section covers beyond the fund's classification is a matter of disclosure practice, not a rule this guide cites. Tax sections commonly explain how items are allocated, why an investor can owe tax on income the fund does not distribute in cash, when Schedule K-1s arrive, and the particular concerns of tax-exempt and non-U.S. investors. A tax section reflects the fund's actual structure and does not promise any investor a particular tax result. ## What should a hedge fund PPM say about retirement-plan (ERISA) investors? {#hedge-fund-ppm-retirement-plan-investors} **Short answer.** A hedge fund PPM explains how the fund treats retirement-plan investors, because a plan investing in the fund can be treated as holding the fund's underlying assets unless an exception applies, such as limited participation by benefit plan investors. [^plan-assets-look-through] [^constitution-erisa-considerations] Participation is significant when, immediately after the most recent acquisition of an equity interest, benefit plan investors hold 25 percent or more of the value of any class of equity interests. The calculation disregards interests held by a person that is not itself a benefit plan investor and that has discretionary authority or control over the fund's assets or provides investment advice about them for a fee, and interests held by that person's affiliates. [^erisa-25-percent-test] A fund that relies on staying below that level states the limit and the information it collects to monitor it. A memorandum filed with the SEC includes an ERISA section telling plan fiduciaries to decide whether the investment fits the plan before investing. [^constitution-erisa-considerations] ## What should a hedge fund PPM say about subscriptions? {#hedge-fund-ppm-subscriptions} **Short answer.** A hedge fund's private placement memorandum (PPM) explains how an investor subscribes, as a memorandum filed with the SEC does when it requires a completed subscription document by the fund's acceptance date and reserves the fund's right to accept or reject any subscription. [^constitution-subscription-deadline] [^constitution-subscription-discretion] The SEC's staff lists a subscription agreement, "a subscription agreement through which investors contract to invest in the private fund"[^sec-ppm-definition-subscriptions], among the documents for a fund's capital raise. [^sec-ppm-definition-subscriptions] The same memorandum states that the qualifications required to invest appear in the subscription documents each prospective investor must complete. [^constitution-subscription-qualifications] The [Hedge Fund Subscription Agreement](/templates/openagreements-hedge-fund-subscription-agreement) and the [Hedge Fund Investor Questionnaire](/templates/openagreements-hedge-fund-investor-questionnaire) are one such set of subscription documents, written to be used with the [Hedge Fund Limited Partnership Agreement](/templates/openagreements-hedge-fund-limited-partnership-agreement) and its private placement memorandum. FinCEN has postponed its investment-adviser anti-money-laundering program and suspicious-activity-report rule until January 1, 2028. [^investment-adviser-aml-delay] A PPM that describes onboarding controls distinguishes the fund's actual practice from that delayed rule. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-01. License: CC BY 4.0. Steven Obiajulu, J.D. edits this topic article for U.S. hedge funds, meaning open-end private funds that take capital up front and let investors withdraw periodically, with Delaware limited-partnership law and federal securities-law overlays; private equity and other closed-end drawdown funds are not covered coverage. It synthesizes legal sources and is not legal advice. This article is for informational purposes only and does not create an attorney-client relationship. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *Hedge Fund Formation: Limited Partnership Agreements and Private Placement Memoranda*, OpenAgreements (last updated September 1, 2026), https://openagreements.org/practice-guides/fund-formation/us/hedge-funds. [^sec-lpa]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”** — "For example, if you structure your private fund as a limited partnership, a limited partnership agreement, or LPA, will document the fund’s key legal terms and mechanics. This may include how the general partner may call for capital commitments, how profits are split between the general partner and the limited partners, any management fees, and the extent to which limited partners may withdraw from the fund." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”.* [^sec-hedge]: **SEC Small Business Glossary: Hedge Fund** — "A hedge fund is a type of private fund that generally invests in a diverse range of securities and typically has more flexible investment strategies than mutual funds." *SEC Small Business Glossary.* [^inv-hedge]: **Investor.gov Glossary: Hedge Funds** — "Like mutual funds, hedge funds pool investors’ money and invest the money in an effort to make a positive return." *Investor.gov Glossary: Hedge Funds.* [^sec-private-definition]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”** — "A private fund is an entity created to pool money from multiple investors that is not required to be registered or regulated as an investment company under the Investment Company Act." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”.* [^delaware-lpa-contract-policy]: **Delaware Revised Uniform Limited Partnership Act § 17-1101(c), 6 Del. C. § 17-1101(c)** — "It is the policy of this chapter to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements." *6 Del. C. § 17-1101(c).* [^delaware-lpa-duty-terms]: **Delaware Revised Uniform Limited Partnership Act § 17-1101(d), 6 Del. C. § 17-1101(d)** — "To the extent that, at law or in equity, a partner or other person has duties (including fiduciary duties) to a limited partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement, the partner’s or other person’s duties may be expanded or restricted or eliminated by provisions in the partnership agreement; provided that the partnership agreement may not eliminate the implied contractual covenant of good faith and fair dealing." *6 Del. C. § 17-1101(d).* [^sec-gp]: **SEC Small Business Glossary: General Partner** — "A general partner is an individual or an entity—typically affiliated with a venture capital firm, private equity firm, or other investment firm—that raises money from limited partners for a private fund organized as a limited partnership and that both invests in and manages the fund." *SEC Small Business Glossary.* [^sec-lp]: **SEC Small Business Glossary: Limited Partner** — "A limited partner is an investor who commits capital to a private fund. Unlike a general partner, a limited partner’s participation in the fund’s investment activities is restricted, and its personal liability for fund debt is limited to the amount of money that the limited partner contributed or committed to contribute. The relationship of a limited partner with the fund and the general partner is governed by a Limited Partnership Agreement." *SEC Small Business Glossary.* [^delaware-lpa-classes]: **Delaware Revised Uniform Limited Partnership Act § 17-302(a), 6 Del. C. § 17-302(a)** — "A partnership agreement may provide for classes or groups of limited partners having such relative rights, powers and duties as the partnership agreement may provide, and may make provision for the future creation in the manner provided in the partnership agreement of additional classes or groups of limited partners having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of limited partners." *6 Del. C. § 17-302(a).* [^sec-adviser]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”** — "The fund may have a separate investment adviser that provides investment advice." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”.* [^sec-ima]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”** — "Documentation often includes an investment management agreement governing the responsibilities of the investment adviser." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”.* [^adviser-registration-baseline]: **SEC Private Funds Building Block: Adviser registration status** — "Private fund advisers are generally investment advisers that are required to register with the SEC or applicable state securities regulators as a registered investment adviser, unless they are exempt from applicable registration requirements (for example, as an exempt reporting adviser)." *SEC Office of the Advocate for Small Business Capital Formation, Private Funds, The Adviser.* [^private-fund-adviser-exemption]: **17 CFR 275.203(m)-1(a): United States private-fund-adviser exemption** — "For purposes of section 203(m) of the Act (15 U.S.C. 80b-3(m)), an investment adviser with its principal office and place of business in the United States is exempt from the requirement to register under section 203 of the Act if the investment adviser: (1) Acts solely as an investment adviser to one or more qualifying private funds; and (2) Manages private fund assets of less than $150 million." *17 C.F.R. § 275.203(m)-1(a)(1)-(2).* [^sec-glossary-exempt-reporting-adviser]: **SEC Small Business Glossary: Exempt Reporting Adviser** — "While exempt reporting advisers are not registered with the SEC, they are still subject to specific reporting requirements and certain other Investment Advisers Act and federal rules, and they also may be subject to state filing or registration requirements." *SEC Small Business Glossary, Exempt Reporting Adviser (SEC staff resource).* [^third-point-filed-performance-allocation]: **Third Point Enhanced LP, Amended and Restated Exempted Limited Partnership Agreement (2018), § 4.1.2.2** — "Subject to Section 4.1.2.3 and Section 4.1.2.7, at the end of each Fiscal Year of the Partnership, twenty percent (20%) of the result of (x) the Net Increase, if any, allocated to a Limited Partner’s Capital Account for such Fiscal Year, minus (y) the Management Fee debited from such Capital Account for such Fiscal Year, minus (z) such Partner’s Loss Recovery Account balance for such Fiscal Year, shall be reallocated to the General Partner (the ‘Incentive Allocation’)." *Third Point Enhanced LP, Am. & Restated Exempted Ltd. P'ship Agreement § 4.1.2.2 (dated July 31, 2018), filed as Exhibit 10.33.* [^sec-glossary-performance-fees]: **SEC Small Business Glossary: Performance Fees** — "Performance fees are compensation provided to an adviser based on the performance of a client’s portfolio." *SEC Small Business Glossary, Performance Fees (SEC staff resource).* [^lion-filed-realized-unrealized]: **The Lion Fund II, L.P., Second Amended and Restated Partnership Agreement (2021), § 1.20(a)** — "‘Net Profits’ and ‘Net Losses’ of the Fund shall include realized and unrealized profits and losses with respect to all securities positions." *The Lion Fund II, L.P., Second Am. & Restated P'ship Agreement § 1.20(a) (dated May 26, 2021), filed as Exhibit 10.1 to Biglari Holdings Inc. Form 8-K.* [^inv-fee]: **Investor.gov: Hedge Funds** — "In addition, they also typically pay a performance fee of 15-20% of the hedge fund’s profit subject to certain measures, such as a high-water mark and a hurdle rate, which can limit when a manager is entitled to performance fees." *Investor.gov: Hedge Funds.* [^lion-hurdle-and-loss-carryforward]: **The Lion Fund II, L.P., Second Amended and Restated Partnership Agreement (2021), § 5.02(A)** — "As of the end of each calendar year, with respect to each Limited Partner other than The Lion Fund, L.P., an Incentive Reallocation in an amount equal to 25% of the Net Increase in Net Asset Value, calculated with respect to each Capital Contribution by such Limited Partner, that exceeds the Hurdle Rate with respect to such Capital Contribution and subject to the ‘Loss Carryforward’ (as defined below) is debited from such Limited Partner's Adjusted Capital and Capital Accounts and credited to the Adjusted Capital and Capital Accounts of the General Partner." *The Lion Fund II, L.P., Second Am. & Restated P'ship Agreement § 5.02(A) (dated May 26, 2021), filed as Exhibit 10.1 to Biglari Holdings Inc. Form 8-K.* [^third-point-loss-recovery]: **Third Point Enhanced LP, Amended and Restated Exempted Limited Partnership Agreement (2018), § 4.1.2.2** — "Subject to Section 4.1.2.3 and Section 4.1.2.7, at the end of each Fiscal Year of the Partnership, twenty percent (20%) of the result of (x) the Net Increase, if any, allocated to a Limited Partner’s Capital Account for such Fiscal Year, minus (y) the Management Fee debited from such Capital Account for such Fiscal Year, minus (z) such Partner’s Loss Recovery Account balance for such Fiscal Year, shall be reallocated to the General Partner (the ‘Incentive Allocation’)." *Third Point Enhanced LP, Am. & Restated Exempted Ltd. P'ship Agreement § 4.1.2.2 (dated July 31, 2018), filed as Exhibit 10.33.* [^inv-fee-hurdles]: **Investor.gov: Hedge Funds** — "In addition, they also typically pay a performance fee of 15-20% of the hedge fund’s profit subject to certain measures, such as a high-water mark and a hurdle rate, which can limit when a manager is entitled to performance fees." *Investor.gov: Hedge Funds.* [^qualified-client-statutory-baseline]: **Investment Advisers Act of 1940 § 205(a)(1), 15 U.S.C. § 80b-5(a)(1)** — "No investment adviser registered or required to be registered with the Commission shall enter into, extend, or renew any investment advisory contract, or in any way perform any investment advisory contract entered into, extended, or renewed on or after November 1, 1940, if such contract- (1) provides for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client;" *15 U.S.C. § 80b-5(a)(1).* [^qualified-client-rule]: **17 CFR 275.205-3(a): Qualified-client exemption** — "The provisions of section 205(a)(1) of the Act (15 U.S.C. 80b-5(a)(1)) will not be deemed to prohibit an investment adviser from entering into, performing, renewing or extending an investment advisory contract that provides for compensation to the investment adviser on the basis of a share of the capital gains upon, or the capital appreciation of, the funds, or any portion of the funds, of a client, Provided, That the client entering into the contract subject to this section is a qualified client, as defined in paragraph (d)(1) of this section." *17 C.F.R. § 275.205-3(a).* [^advisers-act-205-b-4]: **Investment Advisers Act of 1940 § 205(b)(4), 15 U.S.C. § 80b-5(b)(4)** — "Paragraph (1) of subsection (a) shall not- (1) be construed to prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date; (2) apply to an investment advisory contract with- (A) an investment company registered under subchapter I of this chapter, or (B) any other person (except a trust, governmental plan, collective trust fund, or separate account referred to in section 80a–3(c)(11) of this title), provided that the contract relates to the investment of assets in excess of $1 million, if the contract provides for compensation based on the asset value of the company or fund under management averaged over a specified period and increasing and decreasing proportionately with the investment performance of the company or fund over a specified period in relation to the investment record of an appropriate index of securities prices or such other measure of investment performance as the Commission by rule, regulation, or order may specify; (3) apply with respect to any investment advisory contract between an investment adviser and a business development company, as defined in this subchapter, if (A) the compensation provided for in such contract does not exceed 20 per centum of the realized capital gains upon the funds of the business development company over a specified period or as of definite dates, computed net of all realized capital losses and unrealized capital depreciation, and the condition of section 80a–60(a)(4)(B)(iii) of this title is satisfied, and (B) the business development company does not have outstanding any option, warrant, or right issued pursuant to section 80a–60(a)(4)(B) of this title and does not have a profit-sharing plan described in section 80a–56(n) of this title; (4) apply to an investment advisory contract with a company excepted from the definition of an investment company under section 80a–3(c)(7) of this title; or" *15 U.S.C. § 80b-5(b)(4).* [^qualified-client-current-order]: **SEC Order IA-6961: 2026 qualified-client dollar thresholds** — "IT IS HEREBY ORDERED that, for purposes of rule 205-3(d)(1)(i) under the Advisers Act [17 CFR 275.205-3(d)(1)], a qualified client means a natural person who, or a company that, immediately after entering into the contract has at least $1,400,000 under the management of the investment adviser; and IT IS FURTHER ORDERED that, for purposes of rule 205-3(d)(1)(ii)(A) under the Advisers Act [17 CFR 275.205-3(d)(1)(ii)(A)], a qualified client means a natural person who, or a company that, the investment adviser entering into the contract (and any person acting on his behalf) reasonably believes, immediately prior to entering into the contract, has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $2,700,000." *Order Approving Adjustment for Inflation of the Dollar Amount Tests in Rule 205-3 Under the Investment Advisers Act of 1940, Advisers Act Release No. IA-6961, § IV (Apr. 28, 2026).* [^qualified-client-pooled-fund-lookthrough]: **17 CFR 275.205-3(b): Identification of the client** — "In the case of a private investment company, as defined in paragraph (d)(3) of this section, an investment company registered under the Investment Company Act of 1940, or a business development company, as defined in section 202(a)(22) of the Act (15 U.S.C. 80b-2(a)(22)), each equity owner of any such company (except for the investment adviser entering into the contract and any other equity owners not charged a fee on the basis of a share of capital gains or capital appreciation) will be considered a client for purposes of paragraph (a) of this section." *17 C.F.R. § 275.205-3(b).* [^stilwell-filed-lock-up]: **Stilwell Value Partners I, L.P., Amended and Restated Limited Partnership Agreement (2008), § 6.3(b)** — "Except as otherwise provided in this Agreement, Limited Partners will not be permitted to withdraw any investment until the expiration of the second anniversary of the date such investment was accepted into the Partnership." *Stilwell Value Partners I, L.P., Am. & Restated Ltd. P'ship Agreement § 6.3(b) (dated Oct. 1, 2008), filed as Exhibit 10.56.* [^solasglas-filed-notice]: **Solasglas Investments, LP, Third Amended and Restated Exempted Limited Partnership Agreement (2026), § 5.2(b)** — "If a Limited Partner wishes to withdraw funds, it must give written notice to the General Partner at least 3 Business Days prior to the proposed withdrawal date indicating the amount to be withdrawn from such Limited Partner’s Capital Account in such notice." *Solasglas Investments, LP, Third Am. & Restated Exempted Ltd. P'ship Agreement § 5.2(b) (dated May 1, 2026), filed as Exhibit 10.1 to Greenlight Capital Re, Ltd.* [^apollo-filed-withdrawal-gate]: **Apollo IG Core Replacement, L.P., Second Amended and Restated Agreement of Limited Partnership (2026), § 6.02(b)** — "In addition, aggregate withdrawals during any calendar month shall be limited, at the General Partner’s discretion, to 10% (or such higher percentage as the General Partner determines in its sole discretion) of the Net Asset Value attributable to the Partnership as of the last day of the calendar month (the ‘10% Threshold’); provided that the General Partner, in its sole discretion, may elect to apply the 10% Threshold on an aggregated basis with respect to the Partnership and any corresponding series or class of interests in any Parallel Fund, which series or class of interests is established to facilitate participation by investors on a side-by-side and pro rata basis in the same Investments with the Partnership." *Apollo IG Core Replacement, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 6.02(b) (dated June 30, 2026), filed as Exhibit 3.1.* [^apollo-filed-suspension]: **Apollo IG Core Replacement, L.P., Second Amended and Restated Agreement of Limited Partnership (2026), § 6.07(b)** — "The General Partner, in its sole discretion, may suspend withdrawal rights, Quarterly Distributions and/or the determination of the Net Asset Value of each Limited Partner’s Capital Account(s), in whole or in part: (i) during any period in which any stock exchange or over-the-counter market on which a substantial portion of the Partnership’s Investments are quoted, traded or dealt in is closed, other than for ordinary holidays and weekends, or during periods in which dealings are restricted or suspended;" *Apollo IG Core Replacement, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 6.07(b) (dated June 30, 2026), filed as Exhibit 3.1.* [^inv-redeem]: **Investor.gov: Hedge Funds** — "Hedge funds typically limit opportunities to redeem, or cash in, your shares to four times a year or fewer. They also often impose a lock-up period of one year or more, during which you cannot cash in your shares. Furthermore, hedge funds may charge you a redemption fee before you are allowed to cash in your shares. Hedge funds may also have authority to suspend redemptions under certain circumstances, including in times of market distress or when their investments are not able to be quickly or easily liquidated." *Investor.gov: Hedge Funds.* [^delaware-distribution-solvency-limit]: **Delaware Revised Uniform Limited Partnership Act § 17-607(a), 6 Del. C. § 17-607(a)** — "A limited partnership shall not make a distribution to a partner to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specified property of the limited partnership, exceed the fair value of the assets of the limited partnership" *6 Del. C. § 17-607(a).* [^capital-account-filed-net-increase]: **Third Point Enhanced LP, Amended and Restated Exempted Limited Partnership Agreement (2018), § 4.1.2.2** — "Subject to Section 4.1.2.3 and Section 4.1.2.7, at the end of each Fiscal Year of the Partnership, twenty percent (20%) of the result of (x) the Net Increase, if any, allocated to a Limited Partner’s Capital Account for such Fiscal Year, minus (y) the Management Fee debited from such Capital Account for such Fiscal Year, minus (z) such Partner’s Loss Recovery Account balance for such Fiscal Year, shall be reallocated to the General Partner (the ‘Incentive Allocation’)." *Third Point Enhanced LP, Am. & Restated Exempted Ltd. P'ship Agreement § 4.1.2.2 (dated July 31, 2018), filed as Exhibit 10.33.* [^capital-account-filed-designated-security]: **Solasglas Investments, LP, Third Amended and Restated Exempted Limited Partnership Agreement (2026), § 3.5(b)** — "Whenever the Partnership makes an investment that is in a Designated Security or whenever an existing investment is first designated as a Designated Security by the General Partner, the Partnership shall establish a Sub-Account with respect to each Partner that participates in such Designated Security to reflect such Partner’s Capital Account’s pro rata share of all allocations and distributions attributable to transactions involving such Designated Security." *Solasglas Investments, LP, Third Am. & Restated Exempted Ltd. P'ship Agreement § 3.5(b) (dated May 1, 2026), filed as Exhibit 10.1 to Greenlight Capital Re, Ltd.* [^solasglas-filed-new-issues]: **Solasglas Investments, LP, Third Amended and Restated Exempted Limited Partnership Agreement (2026), § 3.5(a)** — "Notwithstanding the provisions of Section 3.4 above, to enable the Partnership to invest in New Issues, the Partnership shall not allocate any items of income, gain, loss, deduction and credit that relate to investments in New Issues to Restricted Capital Accounts except to the extent permitted by the FINRA Rules, and shall instead allocate such items among the other Capital Accounts on a pro rata basis." *Solasglas Investments, LP, Third Am. & Restated Exempted Ltd. P'ship Agreement § 3.5(a) (dated May 1, 2026), filed as Exhibit 10.1 to Greenlight Capital Re, Ltd.* [^sec-pooled]: **SEC Small Business Glossary: Pooled Investment Vehicle** — "A pooled investment vehicle is an entity—often referred to as a fund—that an adviser creates to pool money from multiple investors. Each investor makes an investment in the fund by purchasing an interest in the fund entity, and the adviser uses that money to make investments on behalf of the fund. Investors generally share in the profits and losses in proportion to their interest in the fund." *SEC Small Business Glossary.* [^lion-filed-realized-unrealized-2]: **The Lion Fund II, L.P., Second Amended and Restated Partnership Agreement (2021), § 1.20(a)** — "‘Net Profits’ and ‘Net Losses’ of the Fund shall include realized and unrealized profits and losses with respect to all securities positions." *The Lion Fund II, L.P., Second Am. & Restated P'ship Agreement § 1.20(a) (dated May 26, 2021), filed as Exhibit 10.1 to Biglari Holdings Inc. Form 8-K.* [^finra-new-issue-restriction]: **FINRA Rule 5130(a)(1): Restrictions on the purchase and sale of initial equity public offerings** — "A member or a person associated with a member may not sell, or cause to be sold, a new issue to any account in which a restricted person has a beneficial interest, except as otherwise permitted herein." *FINRA Rule 5130(a)(1).* [^lion-filed-new-issues]: **The Lion Fund II, L.P., Second Amended and Restated Partnership Agreement (2021), § 5.06** — "In the event that the Fund invests in securities that are considered to be ‘New Issues’, as that term is defined in the Rules of the Financial Industry Regulatory Authority, Inc., as may be amended from time to time (the ‘FINRA Rules’), the General Partner shall be permitted to take all such actions as it deems are necessary to ensure that the profits and losses from New Issues are allocated among the Partners in a manner permitted under the FINRA Rules." *The Lion Fund II, L.P., Second Am. & Restated P'ship Agreement § 5.06 (dated May 26, 2021), filed as Exhibit 10.1 to Biglari Holdings Inc. Form 8-K.* [^delaware-duty-modification]: **Delaware Revised Uniform Limited Partnership Act § 17-1101(d), 6 Del. C. § 17-1101(d)** — "To the extent that, at law or in equity, a partner or other person has duties (including fiduciary duties) to a limited partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement, the partner’s or other person’s duties may be expanded or restricted or eliminated by provisions in the partnership agreement; provided that the partnership agreement may not eliminate the implied contractual covenant of good faith and fair dealing." *6 Del. C. § 17-1101(d).* [^delaware-liability-limitation]: **Delaware Revised Uniform Limited Partnership Act § 17-1101(f), 6 Del. C. § 17-1101(f)** — "A partnership agreement may provide for the limitation or elimination of any and all liabilities for breach of contract and breach of duties (including fiduciary duties) of a partner or other person to a limited partnership or to another partner or to an other person that is a party to or is otherwise bound by a partnership agreement; provided, that a partnership agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing." *6 Del. C. § 17-1101(f).* [^inv-duty]: **Investor.gov Glossary: Hedge Funds** — "Hedge funds, however, are subject to the same prohibitions against fraud as are other market participants, and their managers owe a fiduciary duty to the funds that they manage." *Investor.gov Glossary: Hedge Funds.* [^carlyle-filed-disabling-conduct]: **Carlyle Private Equity Partners Fund, L.P., Amended and Restated Limited Partnership Agreement (2025), § 4.2(a)** — "Except as otherwise provided in the Act, the General Partner shall be subject to all of the liabilities of a partner in a partnership without limited partners to (i) Persons other than the Fund and the Shareholders and (ii) subject to the other provisions of this Agreement, the Fund and the Shareholders; provided that to the fullest extent permitted by law, none of the General Partner, the Investment Advisor, their Affiliates (but excluding any Parallel Fund), members, shareholders, stockholders, unitholders or partners (in each case in their respective capacities as such), officers, directors, employees, Carlyle Operating Executives, advisors, the Directors, the Partnership Representative, the Designated Individual and any other Person who serves at the request of the General Partner on behalf of the Fund as an officer, director, partner, member, senior advisor, operating executive, similar consultant or employee of or advisor to any other entity (each, an ‘Indemnified Party’), shall be liable to the Fund or to any Shareholder for (i) any act performed or omission made by such Indemnified Party in connection with the conduct of the business and affairs of the Fund or otherwise in connection with this Agreement or the matters contemplated herein, unless such act or omission resulted from ‘Disabling Conduct,’ which shall mean fraud, bad faith, willful misconduct, gross negligence, a willful and material breach of this Agreement or the Advisory Agreement by such Indemnified Party or (ii) any mistake, negligence, dishonesty or bad faith of any broker or other agent of the Fund unless such Indemnified Party was responsible for the selection or monitoring of such broker or agent and acted in such capacity with gross negligence." *Carlyle Private Equity Partners Fund, L.P., Am. & Restated Ltd. P'ship Agreement § 4.2(a) (dated Oct. 1, 2025), filed as Exhibit 3.1.* [^third-point-filed-expense-cap]: **Third Point Enhanced LP, Amended and Restated Exempted Limited Partnership Agreement (2018), § 8.2(b)** — "Notwithstanding anything herein, unless otherwise approved in writing by the Board, to the extent the aggregate amount of the Expenses payable by the Partnership for any Fiscal Year (which, for purposes of this Section 8.2(b), Expenses shall exclude, (A) any Expenses incurred pursuant to Section 8.2(a)(vii) and Section 8.2(a)(xvii), (B) use of ‘soft dollars,’ (C) any indemnification payments made pursuant to Section 6.5 and that may be covered under Section 8.2(a)(viii) and (D) the Management Fee) exceed the product of (x) 0.0175 and (y) the average Net Assets (calculated as the average Net Assets as of each calendar month end) for such Fiscal Year, then the Investment Manager shall reimburse the amount of such excess to the Partnership." *Third Point Enhanced LP, Am. & Restated Exempted Ltd. P'ship Agreement § 8.2(b) (dated July 31, 2018), filed as Exhibit 10.33.* [^solasglas-filed-general-partner-valuation]: **Solasglas Investments, LP, Third Amended and Restated Exempted Limited Partnership Agreement (2026), § 7.2(a)** — "The General Partner shall value or have valued the Securities and other Assets of the Partnership as of the close of business on the last day of each Fiscal Period and on any other date selected by the General Partner." *Solasglas Investments, LP, Third Am. & Restated Exempted Ltd. P'ship Agreement § 7.2(a) (dated May 1, 2026), filed as Exhibit 10.1 to Greenlight Capital Re, Ltd.* [^apollo-filed-quarterly-statements]: **Apollo IG Core Replacement, L.P., Second Amended and Restated Agreement of Limited Partnership (2026), § 9.03** — "The Partnership shall also provide periodic unaudited performance information, no less frequently than quarterly, to the Limited Partners, including (i) a report and summary of the Investments of the Partnership, (ii) portfolio valuation information and (iii) a statement of the Net Asset Value of the Partnership and a statement of the Capital Account balance of each Limited Partner, as of the last calendar day of such quarter." *Apollo IG Core Replacement, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 9.03 (dated June 30, 2026), filed as Exhibit 3.1.* [^endowment-filed-expense-cap]: **The Endowment PMF Master Fund, L.P., Amended and Restated Agreement of Limited Partnership (2014), § 3.11(b)** — "The Partnership shall not enter into an Investment Advisory Agreement with any Adviser unless such Adviser, pursuant to such Investment Advisory Agreement or otherwise, agrees to waive and/or reimburse the Partnership for its Management Fee and, to the extent necessary, reimburse the Master Fund for expenses incurred, solely to the extent necessary to limit the total expenses of the Partnership in each Fiscal Year to an amount equal to 1.25% of the Partnership’s Net Assets, excluding fees and expenses directly charged by underlying investment funds and underlying investment fund managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Partnership’s business (‘Excluded Expenses’)." *The Endowment PMF Master Fund, L.P., Am. & Restated Agreement of Ltd. P'ship § 3.11(b) (dated Feb. 18, 2014), filed as Exhibit 99.A.1.* [^risk-expense]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "Advisers charged private fund clients for expenses that were not permitted by the relevant fund operating agreements, such as adviser-related expenses like salaries of adviser personnel, compliance, regulatory filings, and office expenses, thereby causing investors to overpay expenses." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^risk-value]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "Valuation. The staff observed private fund advisers that did not value client assets in accordance with their valuation processes or in accordance with disclosures to clients (such as that the assets would be valued in accordance with GAAP). In some cases, the staff observed that this failure to value a private fund’s holdings in accordance with the disclosed valuation process led to overcharging management fees and carried interest because such fees were based on inappropriately overvalued holdings." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^ilpa-definition]: **Institutional Limited Partners Association, The Alignment Gap: Rethinking Costs in Private Equity Fund Formation (May 2026)** — "However, the rapid growth and maturation of the PE space have also created inherent structural challenges in the form of spiraling organizational expenses—the legal, administrative, and compliance costs incurred during the formation of a new investment fund—costs that have historically been borne by LPs alone." *Institutional Limited Partners Association, The Alignment Gap: Rethinking Costs in Private Equity Fund Formation (May 2026).* [^ilpa-cap]: **Institutional Limited Partners Association, The Alignment Gap: Rethinking Costs in Private Equity Fund Formation (May 2026)** — "To meaningfully constrain cost overruns, organizational expenses to be borne solely by LPs should be capped at the lower of 5 basis points of a fund’s target assets under management (AUM) or $10 million in total." *Institutional Limited Partners Association, The Alignment Gap: Rethinking Costs in Private Equity Fund Formation (May 2026).* [^third-point-filed-side-letters]: **Third Point Enhanced LP, Amended and Restated Exempted Limited Partnership Agreement (2018), § 1.52** — "‘Other Agreements’ shall mean side letters or similar separate written agreements, the provisions of which may modify the terms of this Agreement, including any agreement with a Limited Partner that provides for special or more favorable rights." *Third Point Enhanced LP, Am. & Restated Exempted Ltd. P'ship Agreement § 1.52 (dated July 31, 2018), filed as Exhibit 10.33.* [^apollo-filed-other-agreements]: **Apollo IG Core Replacement, L.P., Second Amended and Restated Agreement of Limited Partnership (2026), § 11.02** — "Notwithstanding anything to the contrary in this Agreement, or of any Subscription Agreement, the Partners hereto acknowledge and agree that the General Partner on its own behalf or on behalf of the Partnership, in its sole discretion and without prior notice to or further act, approval or consent of any Limited Partner, may enter into agreements (‘Other Agreements’) with certain Limited Partners that have the effect of establishing rights under, or altering or supplementing the terms of, this Agreement or of any Subscription Agreement with respect to such Limited Partner, including with respect to the Management Fee, withdrawal rights, information rights, voting rights or other rights or the currency in respect of which such Interests are offered." *Apollo IG Core Replacement, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 11.02 (dated June 30, 2026), filed as Exhibit 3.1.* [^nvca-purpose]: **National Venture Capital Association, 2020 Management Rights Letter** — "In order to build a case for an exemption from the ERISA Plan asset rules, a venture fund will generally ask each of its portfolio companies to sign a management rights letter in connection with the fund’s initial investment. An example of such a letter follows." *National Venture Capital Association, 2020 Management Rights Letter.* [^erisa-rights]: **29 C.F.R. § 2510.3-101(d)(3)(ii)** — "The term ‘management rights’ means contractual rights directly between the investor and an operating company to substantially participate in, or substantially influence the conduct of, the management of the operating company." *29 C.F.R. § 2510.3-101(d)(3)(ii).* [^risk-side]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "The staff observed private fund advisers that entered into agreements with select investors (‘side letters’) that established special terms, including preferential liquidity terms, but did not provide adequate disclosure about these side letters. As a result, some investors were unaware of the potential harm that could be caused if the selected investors exercised the special terms granted by the side letters." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^stilwell-filed-amendment-power]: **Stilwell Value Partners I, L.P., Amended and Restated Limited Partnership Agreement (2008), § 9.1(a)** — "The Partnership Agreement may be amended by the General Partner in its sole discretion without notification to, or the consent of the Limited Partners, at any time and without any limitation, so long as such amendment is not materially adverse to the Limited Partners’ interests." *Stilwell Value Partners I, L.P., Am. & Restated Ltd. P'ship Agreement § 9.1(a) (dated Oct. 1, 2008), filed as Exhibit 10.56.* [^seidman-filed-amendment-threshold]: **Seidman Investment Partnership II, L.P., Second Amended and Restated Agreement of Limited Partnership (2005), § 57** — "This Agreement may be amended, in whole or in part, by the written consent of (a) the General Partner, and (b) Partners the value of whose Capital Account constitute not less than fifty percent (50%) of the total value of all Capital Accounts of the Partnership, provided that no such amendment shall affect the allocation of Net Profit or Net Loss to any Partner who has not consented to such amendment." *Seidman Investment Partnership II, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 57 (dated Oct. 15, 2005), filed as Exhibit 99.5.* [^sec-lp-2]: **SEC Small Business Glossary: Limited Partner** — "A limited partner is an investor who commits capital to a private fund. Unlike a general partner, a limited partner’s participation in the fund’s investment activities is restricted, and its personal liability for fund debt is limited to the amount of money that the limited partner contributed or committed to contribute. The relationship of a limited partner with the fund and the general partner is governed by a Limited Partnership Agreement." *SEC Small Business Glossary.* [^lion-filed-amendment-threshold]: **The Lion Fund II, L.P., Second Amended and Restated Partnership Agreement (2021), § 14.07** — "Amendments or modifications may be made to this Agreement only by setting forth such amendments or modifications in a document duly executed by the General Partner and Limited Partners owning at least fifty-one percent (51%) of the Interests of all of the Limited Partners (which may be in the form of a negative consent, such that a Limited Partner will be deemed to have consented to a proposed amendment if the General Partner does not receive notification of such Limited Partner's objection within ten business days of the General Partner's providing notice of the proposed amendment to such Limited Partner)." *The Lion Fund II, L.P., Second Am. & Restated P'ship Agreement § 14.07 (dated May 26, 2021), filed as Exhibit 10.1 to Biglari Holdings Inc. Form 8-K.* [^stilwell-filed-liquidation-on-dissolution]: **Stilwell Value Partners I, L.P., Amended and Restated Limited Partnership Agreement (2008), § 8.2(a)** — "Upon dissolution of the Partnership, the General Partner shall promptly liquidate the business and administrative affairs of the Partnership, or shall appoint a liquidator to do so however, if the General Partner is unable to liquidate the Partnership, or appoint a liquidator, a Person appointed by the holders of more than 50% of the aggregate Partnership Percentages of all Limited Partners shall liquidate the business and administrative affairs of the Partnership." *Stilwell Value Partners I, L.P., Am. & Restated Ltd. P'ship Agreement § 8.2(a) (dated Oct. 1, 2008), filed as Exhibit 10.56.* [^sec-lp-3]: **SEC Small Business Glossary: Limited Partner** — "A limited partner is an investor who commits capital to a private fund. Unlike a general partner, a limited partner’s participation in the fund’s investment activities is restricted, and its personal liability for fund debt is limited to the amount of money that the limited partner contributed or committed to contribute. The relationship of a limited partner with the fund and the general partner is governed by a Limited Partnership Agreement." *SEC Small Business Glossary.* [^custody-rule-annual-audit]: **17 CFR 275.206(4)-2(b)(4): Pooled-vehicle annual-audit route** — "You are not required to comply with paragraphs (a)(2) and (a)(3) of this section and you shall be deemed to have complied with paragraph (a)(4) of this section with respect to the account of a limited partnership (or limited liability company, or another type of pooled investment vehicle) that is subject to audit (as defined in rule 1-02(d) of Regulation S-X (17 CFR 210.1-02(d))): (i) At least annually and distributes its audited financial statements prepared in accordance with generally accepted accounting principles to all limited partners (or members or other beneficial owners) within 120 days of the end of its fiscal year; (ii) By an independent public accountant that is registered with, and subject to regular inspection as of the commencement of the professional engagement period, and as of each calendar year-end, by, the Public Company Accounting Oversight Board in accordance with its rules; and (iii) Upon liquidation and distributes its audited financial statements prepared in accordance with generally accepted accounting principles to all limited partners (or members or other beneficial owners) promptly after the completion of such audit." *17 C.F.R. § 275.206(4)-2(b)(4)(i)-(iii).* [^sec-ppm-definition]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”: Capital Raise Considerations** — "Documentation for your capital raise may include, among other things: • an offering document—frequently called a private placement memorandum—that acts as a detailed disclosure document for potential investors; and • a subscription agreement through which investors contract to invest in the private fund." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”, Capital Raise Considerations (SEC staff resource).* [^ppm-private-offering-statute]: **15 U.S.C. § 77d(a)(1)-(2): Exempted transactions** — "The provisions of section 77e of this title shall not apply to— (1) transactions by any person other than an issuer, underwriter, or dealer. (2) transactions by an issuer not involving any public offering." *15 U.S.C. § 77d(a)(1)-(2).* [^ppm-rule-506-safe-harbor]: **17 CFR 230.506(a): Exemption** — "Offers and sales of securities by an issuer that satisfy the conditions in paragraph (b) or (c) of this section shall be deemed to be transactions not involving any public offering within the meaning of section 4(a)(2) of the Act." *17 C.F.R. § 230.506(a).* [^ppm-antifraud-rule]: **17 CFR 275.206(4)-8: Pooled investment vehicles** — "It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for any investment adviser to a pooled investment vehicle to: (1) Make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, to any investor or prospective investor in the pooled investment vehicle; or" *17 C.F.R. § 275.206(4)-8(a)(1).* [^seidman-filed-offering-memorandum-conflict]: **Seidman Investment Partnership II, L.P., Second Amended and Restated Agreement of Limited Partnership (2005), § 62(e)** — "If there is a conflict between the terms and conditions of this Agreement and any offering memorandum of the Partnership, this Agreement shall be controlling." *Seidman Investment Partnership II, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 62(e) (dated Oct. 15, 2005), filed as Exhibit 99.5.* [^reconciliation-seidman-conflict]: **Seidman Investment Partnership II, L.P., Second Amended and Restated Agreement of Limited Partnership (2005), § 62(e)** — "If there is a conflict between the terms and conditions of this Agreement and any offering memorandum of the Partnership, this Agreement shall be controlling." *Seidman Investment Partnership II, L.P., Second Am. & Restated Agreement of Ltd. P'ship § 62(e) (dated Oct. 15, 2005), filed as Exhibit 99.5.* [^reconciliation-antifraud-rule]: **17 CFR 275.206(4)-8: Pooled investment vehicles** — "It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for any investment adviser to a pooled investment vehicle to: (1) Make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, to any investor or prospective investor in the pooled investment vehicle; or" *17 C.F.R. § 275.206(4)-8(a)(1).* [^risk-rule]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "In addition, Advisers Act Rule 206(4)-8 prohibits investment advisers to pooled investment vehicles from (1) making any untrue statement of a material fact or omitting to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, to any investor or prospective investor in the pooled investment vehicle; or (2) otherwise engaging in any act, practice, or course of business that is fraudulent, deceptive, or manipulative with respect to any investor or prospective investor in the pooled investment vehicle." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^offering-general-solicitation-limit]: **17 CFR 230.502(c): Limitation on manner of offering** — "Except as provided in § 230.504(b)(1) or § 230.506(c), neither the issuer nor any person acting on its behalf shall offer or sell the securities by any form of general solicitation or general advertising, including, but not limited to, the following: (1) Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; and (2) Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising; Provided, however, that publication by an issuer of a notice in accordance with § 230.135c or filing with the Commission by an issuer of a notice of sales on Form D (17 CFR 239.500) in which the issuer has made a good faith and reasonable attempt to comply with the requirements of such form, shall not be deemed to constitute general solicitation or general advertising for purposes of this section; Provided further, that, if the requirements of § 230.135e are satisfied, providing any journalist with access to press conferences held outside of the United States, to meetings with issuer or selling security holder representatives conducted outside of the United States, or to written press-related materials released outside the United States, at or in which a present or proposed offering of securities is discussed, will not be deemed to constitute general solicitation or general advertising for purposes of this section." *17 C.F.R. § 230.502(c).* [^offering-rule-506c]: **17 CFR 230.506(c): Offerings using general solicitation** — "All purchasers of securities sold in any offering under paragraph (c) of this section are accredited investors." *17 C.F.R. § 230.506(c)(2)(i).* [^offering-rule-506c-verification]: **17 CFR 230.506(c)(2)(ii): Accredited-investor verification** — "The issuer shall take reasonable steps to verify that purchasers of securities sold in any offering under paragraph (c) of this section are accredited investors." *17 C.F.R. § 230.506(c)(2)(ii).* [^sec-4a2]: **SEC Small Business Glossary: Section 4(a)(2)** — "Section 4(a)(2) of the Securities Act of 1933, sometimes referred to as the ‘private placement’ exemption, exempts transactions by an issuer that do not involve a public offering from the Securities Act’s registration requirements. Rules 506(b) and (c) of Regulation D, commonly used regulatory pathways for private offerings, are exemptions that a company can rely on to conduct an offering in accordance with the Section 4(a)(2) exemption." *SEC Small Business Glossary.* [^offering-rule-506b-purchasers]: **17 CFR 230.506(b)(2)(i)-(ii): Purchaser limit and sophistication** — "There are no more than, or the issuer reasonably believes that there are no more than, 35 purchasers of securities from the issuer in offerings under this section in any 90-calendar-day period. Note 1 to paragraph (b)(2)(i): See § 230.501(e) for the calculation of the number of purchasers and § 230.502(a) for what may or may not constitute an offering under paragraph (b) of this section. (ii) Nature of purchasers. Each purchaser who is not an accredited investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes immediately prior to making any sale that such purchaser comes within this description." *17 C.F.R. § 230.506(b)(2)(i)-(ii) & note 1 to paragraph (b)(2)(i).* [^offering-nonaccredited-information]: **17 CFR 230.502(b): Information requirements** — "If the issuer sells securities under § 230.506(b) to any purchaser that is not an accredited investor, the issuer shall furnish the information specified in paragraph (b)(2) of this section to such purchaser a reasonable time prior to sale." *17 C.F.R. § 230.502(b)(1).* [^offering-resale-limit]: **17 CFR 230.502(d): Limitations on resale** — "Except as provided in § 230.504(b)(1), securities acquired in a transaction under Regulation D shall have the status of securities acquired in a transaction under section 4(a)(2) of the Act and cannot be resold without registration under the Act or an exemption therefrom." *17 C.F.R. § 230.502(d).* [^offering-bad-actor-disqualification]: **17 CFR 230.506(d)(1): Bad-actor disqualification** — "No exemption under this section shall be available for a sale of securities if the issuer; any predecessor of the issuer; any affiliated issuer; any director, executive officer, other officer participating in the offering, general partner or managing member of the issuer; any beneficial owner of 20% or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power; any promoter connected with the issuer in any capacity at the time of such sale; any investment manager of an issuer that is a pooled investment fund; any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of securities; any general partner or managing member of any such investment manager or solicitor; or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor:" *17 C.F.R. § 230.506(d)(1).* [^private-fund-section-3c1]: **15 U.S.C. § 80a-3(c)(1): Private-fund exclusion** — "Notwithstanding subsection (a), none of the following persons is an investment company within the meaning of this subchapter: (1) Any issuer whose outstanding securities (other than short-term paper) are beneficially owned by not more than one hundred persons (or, in the case of a qualifying venture capital fund, 250 persons) and which is not making and does not presently propose to make a public offering of its securities." *15 U.S.C. § 80a-3(c)(1).* [^private-fund-section-3c7]: **15 U.S.C. § 80a-3(c)(7): Qualified-purchaser private-fund exclusion** — "Any issuer, the outstanding securities of which are owned exclusively by persons who, at the time of acquisition of such securities, are qualified purchasers, and which is not making and does not at that time propose to make a public offering of such securities. Securities that are owned by persons who received the securities from a qualified purchaser as a gift or bequest, or in a case in which the transfer was caused by legal separation, divorce, death, or other involuntary event, shall be deemed to be owned by a qualified purchaser, subject to such rules, regulations, and orders as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors." *15 U.S.C. § 80a-3(c)(7)(A).* [^sec-glossary-private-fund]: **SEC Small Business Glossary: Private Fund** — "A private fund is a pooled investment vehicle that is excluded from the definition of investment company by Section 3(c)(1) or 3(c)(7) of the Investment Company Act—commonly referred to as a 3(c)(1) Fund or a 3(c)(7) Fund." *SEC Small Business Glossary, Private Fund (SEC staff resource).* [^fast-company]: **SEC Division of Investment Management, Investment Company Registration and Regulation Package** — "Section 3(a)(1)(A) of the Investment Company Act defines an investment company as an issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in ‘securities.’" *SEC Division of Investment Management, Investment Company Registration and Regulation Package.* [^fast-private]: **SEC Division of Investment Management, Investment Company Registration and Regulation Package** — "Many companies rely on one of the exceptions from the definition of investment company set forth in Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act. These companies are commonly known as ‘private investment companies.’ Some private investment companies are commonly known as ‘hedge funds.’" *SEC Division of Investment Management, Investment Company Registration and Regulation Package.* [^private-fund-section-3c1-lookthrough]: **15 U.S.C. § 80a-3(c)(1)(A): Company-investor look-through** — "Beneficial ownership by a company shall be deemed to be beneficial ownership by one person, except that, if the company owns 10 per centum or more of the outstanding voting securities of the issuer, and is or, but for the exception provided for in this paragraph or paragraph (7), would be an investment company, the beneficial ownership shall be deemed to be that of the holders of such company's outstanding securities (other than short-term paper)." *15 U.S.C. § 80a-3(c)(1)(A).* [^investor-gate-accredited-investor]: **17 CFR 230.501(a): Accredited investor** — "§ 230.501 Definitions and terms used in Regulation D. As used in Regulation D (§ 230.500 et seq. of this chapter), the following terms shall have the meaning indicated: (a) Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:" *17 C.F.R. § 230.501(a).* [^investor-gate-qualified-purchaser]: **15 U.S.C. § 80a-2(a)(51)(A): Qualified purchaser** — "(51)(A) ‘Qualified purchaser’ means— (i) any natural person (including any person who holds a joint, community property, or other similar shared ownership interest in an issuer that is excepted under section 80a–3(c)(7) of this title with that person's qualified purchaser spouse) who owns not less than $5,000,000 in investments, as defined by the Commission; (ii) any company that owns not less than $5,000,000 in investments and that is owned directly or indirectly by or for 2 or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons;" *15 U.S.C. § 80a-2(a)(51)(A)(i)-(ii).* [^exclusions-qualified-client-rule]: **17 CFR 275.205-3(a): Qualified-client exemption** — "The provisions of section 205(a)(1) of the Act (15 U.S.C. 80b-5(a)(1)) will not be deemed to prohibit an investment adviser from entering into, performing, renewing or extending an investment advisory contract that provides for compensation to the investment adviser on the basis of a share of the capital gains upon, or the capital appreciation of, the funds, or any portion of the funds, of a client, Provided, That the client entering into the contract subject to this section is a qualified client, as defined in paragraph (d)(1) of this section." *17 C.F.R. § 275.205-3(a).* [^sec-antifraud]: **SEC Private Funds Building Block** — "Antifraud provisions of the federal securities laws broadly apply to all funds and advisers, whether or not they are otherwise subject to or required to register under other provisions of the federal securities laws." *SEC Private Funds Building Block.* [^antifraud-securities-act-section-17a]: **Securities Act of 1933 § 17(a), 15 U.S.C. § 77q(a)** — "It shall be unlawful for any person in the offer or sale of any securities (including security-based swaps) or any security-based swap agreement (as defined in section 78c(a)(78) 1 of this title) by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly— (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser." *15 U.S.C. § 77q(a)(1)-(3).* [^antifraud-rule-10b5]: **17 CFR 240.10b-5: Employment of manipulative and deceptive devices** — "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security." *17 C.F.R. § 240.10b-5(a)-(c).* [^pooled-vehicle-antifraud-rule]: **17 CFR 275.206(4)-8: Pooled investment vehicles** — "It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for any investment adviser to a pooled investment vehicle to: (1) Make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, to any investor or prospective investor in the pooled investment vehicle; or (2) Otherwise engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative with respect to any investor or prospective investor in the pooled investment vehicle." *17 C.F.R. § 275.206(4)-8(a)(1)-(2).* [^sec-form]: **SEC: Filing a Form D notice** — "A company must file this notice within 15 days after the first sale of securities in the offering. For this purpose, the date of first sale is the date on which the first investor is irrevocably contractually committed to invest. If the due date falls on a Saturday, Sunday or holiday, it is moved to the next business day." *SEC: Filing a Form D notice.* [^form-d-filing-rule]: **17 CFR 230.503(a): Filing of notice of sales** — "An issuer offering or selling securities in reliance on § 230.504 or § 230.506 must file with the Commission a notice of sales containing the information required by Form D (17 CFR 239.500) for each new offering of securities no later than 15 calendar days after the first sale of securities in the offering, unless the end of that period falls on a Saturday, Sunday or holiday, in which case the due date would be the first business day following." *17 C.F.R. § 230.503(a).* [^placement-agent-reg-d-not-exempt]: **SEC Guide to Broker-Dealer Registration: Private placements** — "A security sold in a transaction that is exempt from registration under the Securities Act of 1933 (the ‘1933 Act’) is not necessarily an ‘exempted security’ under the Exchange Act. For example, a person who sells securities that are exempt from registration under Regulation D of the 1933 Act must nevertheless register as a broker-dealer. In other words, ‘placement agents’ are not exempt from broker-dealer registration." *SEC Division of Trading and Markets, Guide to Broker-Dealer Registration, § II.D.4 (Apr. 2008).* [^placement-agent-registration-indicators]: **SEC Guide to Broker-Dealer Registration: Transaction-role and compensation indicators** — "Do you participate in important parts of a securities transaction, including solicitation, negotiation, or execution of the transaction? Does your compensation for participation in the transaction depend upon, or is it related to, the outcome or size of the transaction or deal? Do you receive trailing commissions, such as 12b-1 fees? Do you receive any other transaction-related compensation?" *SEC Division of Trading and Markets, Guide to Broker-Dealer Registration, § II.A (Apr. 2008).* [^inv-strategy]: **Investor.gov: Hedge Funds** — "Read a fund's offering memorandum and related materials. Make sure you understand the level of risk involved in the fund's investment strategies. Consider if the risks are suitable to your personal investing goals, time horizons, and risk tolerance." *Investor.gov: Hedge Funds.* [^inv-leverage]: **Investor.gov: Hedge Funds** — "The use of these techniques will magnify both the potential gain and the potential loss from an investment." *Investor.gov: Hedge Funds.* [^nfa-cpo-status]: **NFA: Commodity Pool Operator Registration** — "A commodity pool operator (CPO) is an individual or organization that operates a commodity pool and solicits funds for that commodity pool. A commodity pool is an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options on futures, retail off-exchange forex contracts, or swaps, or to invest in another commodity pool. CPO registration is required unless the CPO qualifies for one of the exemptions from registration outlined in CFTC Regulations 4.5 or 4.13." *National Futures Association, Commodity Pool Operator (CPO) Registration.* [^nfa-cta-status]: **NFA: Commodity Trading Advisor Registration** — "A commodity trading advisor (CTA) is an individual or organization that, for compensation or profit, advises others, directly or indirectly, as to the value of or the advisability of trading futures contracts, options on futures, retail off-exchange forex contracts or swaps." *National Futures Association, Commodity Trading Advisor (CTA) Registration.* [^nfa-exemption-filing]: **NFA Exemptions System: Electronic filing** — "Commodity pool operators (CPO) and commodity trading advisors (CTA) must electronically file with NFA notices of exclusion or exemption from CFTC Part 4 Requirements using NFA's Exemptions System. In order to access this system, the firm's security manager(s) must set up EasyFile security." *National Futures Association, Exemptions.* [^nfa-exemption-affirmation]: **NFA Exemptions System: Annual affirmation** — "CFTC regulations require any person claiming an exemption or exclusion from CPO registration under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or an exemption from CTA registration under 4.14(a)(8) to annually affirm the applicable notice of exemption or exclusion within 60 days of the calendar year end." *National Futures Association, Exemptions, Annual Affirmation Process.* [^inv-leverage-2]: **Investor.gov: Hedge Funds** — "The use of these techniques will magnify both the potential gain and the potential loss from an investment." *Investor.gov: Hedge Funds.* [^strategy-antifraud-rule]: **17 CFR 275.206(4)-8: Pooled investment vehicles** — "It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for any investment adviser to a pooled investment vehicle to: (1) Make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, to any investor or prospective investor in the pooled investment vehicle; or" *17 C.F.R. § 275.206(4)-8(a)(1).* [^risk-conflict]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "An investment adviser must eliminate or make full and fair disclosure of all conflicts of interest which might incline an investment adviser – consciously or unconsciously – to render advice which is not disinterested such that a client can provide informed consent to the conflict." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^risk-alloc]: **SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020)** — "The staff observed private fund advisers that did not provide adequate disclosure about conflicts relating to allocations of investments among clients, including the adviser’s largest private fund clients (‘flagship funds’), private funds that invest alongside flagship funds in the same investments (‘coinvestment vehicles’), sub-advised mutual funds, collateralized loan obligation funds, and separately managed accounts (‘SMAs’) (together, ‘clients’)." *SEC Office of Compliance Inspections and Examinations, Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds (June 23, 2020).* [^constitution-administrator]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Administrator** — "The Fund has contracted with UMB Fund Services, Inc (the ‘Administrator’) to provide it with certain administrative and accounting services." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^constitution-counsel]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Legal Counsel** — "Faegre Drinker Biddle & Reath LLP, of One Logan Square, Suite 2000, Philadelphia, PA 19103-6996, serves as counsel to the Fund and the Adviser of the Fund." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^custody-rule-scope]: **17 CFR 275.206(4)-2(a)(1): Scope and qualified-custodian condition** — "If you are an investment adviser registered or required to be registered under section 203 of the Act (15 U.S.C. 80b-3), it is a fraudulent, deceptive, or manipulative act, practice or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for you to have custody of client funds or securities unless: (1) Qualified custodian. A qualified custodian maintains those funds and securities: (i) In a separate account for each client under that client's name; or (ii) In accounts that contain only your clients' funds and securities, under your name as agent or trustee for the clients." *17 C.F.R. § 275.206(4)-2(a)(1)(i)-(ii).* [^custody-rule-general-partner]: **17 CFR 275.206(4)-2(d)(2): Custody includes general-partner capacity** — "Custody includes: (i) Possession of client funds or securities (but not of checks drawn by clients and made payable to third parties) unless you receive them inadvertently and you return them to the sender promptly but in any case within three business days of receiving them; (ii) Any arrangement (including a general power of attorney) under which you are authorized or permitted to withdraw client funds or securities maintained with a custodian upon your instruction to the custodian; and (iii) Any capacity (such as general partner of a limited partnership, managing member of a limited liability company or a comparable position for another type of pooled investment vehicle, or trustee of a trust) that gives you or your supervised person legal ownership of or access to client funds or securities." *17 C.F.R. § 275.206(4)-2(d)(2)(i)-(iii).* [^custody-rule-annual-audit-2]: **17 CFR 275.206(4)-2(b)(4): Pooled-vehicle annual-audit route** — "You are not required to comply with paragraphs (a)(2) and (a)(3) of this section and you shall be deemed to have complied with paragraph (a)(4) of this section with respect to the account of a limited partnership (or limited liability company, or another type of pooled investment vehicle) that is subject to audit (as defined in rule 1-02(d) of Regulation S-X (17 CFR 210.1-02(d))): (i) At least annually and distributes its audited financial statements prepared in accordance with generally accepted accounting principles to all limited partners (or members or other beneficial owners) within 120 days of the end of its fiscal year; (ii) By an independent public accountant that is registered with, and subject to regular inspection as of the commencement of the professional engagement period, and as of each calendar year-end, by, the Public Company Accounting Oversight Board in accordance with its rules; and (iii) Upon liquidation and distributes its audited financial statements prepared in accordance with generally accepted accounting principles to all limited partners (or members or other beneficial owners) promptly after the completion of such audit." *17 C.F.R. § 275.206(4)-2(b)(4)(i)-(iii).* [^inv-value-2]: **Investor.gov: Hedge Funds** — "Hedge funds may hold investments that are difficult to sell and may be difficult to value. You should understand how a hedge fund determines the value of its holdings and the extent to which a fund’s holdings are valued by independent sources." *Investor.gov: Hedge Funds.* [^constitution-tax-classification]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Certain U.S. Federal Income Tax Considerations** — "The Fund is a limited liability company, and no election will be filed with the IRS to cause it to be classified as a corporation for federal income tax purposes. Accordingly, the Fund will be classified as a partnership for U.S. federal income tax purposes." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^sec-ppm-definition-tax]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”: Capital Raise Considerations** — "Documentation for your capital raise may include, among other things: • an offering document—frequently called a private placement memorandum—that acts as a detailed disclosure document for potential investors; and • a subscription agreement through which investors contract to invest in the private fund." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”, Capital Raise Considerations (SEC staff resource).* [^plan-assets-look-through]: **29 CFR 2510.3-101(a)(2): Plan assets in an investment fund** — "However, in the case of a plan's investment in an equity interest of an entity that is neither a publicly-offered security nor a security issued by an investment company registered under the Investment Company Act of 1940 its assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that— (i) The entity is an operating company, or (ii) Equity participation in the entity by benefit plan investors is not significant." *29 C.F.R. § 2510.3-101(a)(2).* [^constitution-erisa-considerations]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), ERISA Considerations** — "In accordance with ERISA’s general fiduciary standards, before investing in the Fund, a Plan fiduciary should determine whether such an investment is permitted under the governing Plan instruments and is appropriate for the Plan in view of its overall investment policy and the composition and diversification of its portfolio." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^erisa-25-percent-test]: **29 CFR 2510.3-101(f)(1): Significant benefit-plan-investor participation** — "Equity participation in an entity by benefit plan investors is ‘significant’ on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25 percent or more of the value of any class of equity interests in the entity is held by benefit plan investors (as defined in paragraph (f)(2)). For purposes of determinations pursuant to this paragraph (f), the value of any equity interests held by a person (other than a benefit plan investor) who has discretionary authority or control with respect to the assets of the entity or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person, shall be disregarded." *29 C.F.R. § 2510.3-101(f)(1).* [^constitution-subscription-deadline]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Subscription Procedure** — "A prospective investor must submit a completed subscription document on or prior to the acceptance date set by the Fund and notified to prospective investors." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^constitution-subscription-discretion]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Subscription Procedure** — "The Fund reserves the right, in its sole discretion, to accept or reject any subscription to purchase Units in the Fund at any time." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^sec-ppm-definition-subscriptions]: **SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”: Capital Raise Considerations** — "Documentation for your capital raise may include, among other things: • an offering document—frequently called a private placement memorandum—that acts as a detailed disclosure document for potential investors; and • a subscription agreement through which investors contract to invest in the private fund." *SEC Office of the Advocate for Small Business Capital Formation, “What do I need to know before starting a private fund?”, Capital Raise Considerations (SEC staff resource).* [^constitution-subscription-qualifications]: **Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum (2026), Eligible Investors** — "The qualifications required to invest in the Fund appear in subscription documents that must be completed by each prospective investor." *Constitution Capital Evergreen Partnership Fund, LLC, Confidential Private Placement Memorandum, filed as Part A of Form N-2 (Post-Effective Amendment, 2026).* [^investment-adviser-aml-delay]: **FinCEN: Investment-adviser AML rule postponed to 2028** — "Today, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule to extend the effective date of the rule establishing Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (IA AML Rule) from January 1, 2026, until January 1, 2028." *FinCEN, FinCEN Issues Final Rule to Postpone Effective Date of Investment Adviser Rule to 2028 (Dec. 31, 2025).* For repeat use, install the skill: `npx skills add open-agreements/open-agreements` (lawyer-reviewed agreement templates + 50-state practice guides).