SETTING UP A HEDGE FUND

I have researched setting up my own hedge fund and I may have found a way to get my idea started. My problem is that I am not a registered investment advisor nor a stock broker. I have been researching the idea of becoming one, but I don't know where to start.

Maybe my friend, Paul can help out since his neighbor used to work for Merrill Lynch. There is also a website that will sponsor and individual to get the Series 65, but again it is a fear of venturing into the unknown.

Here is a clip from a website (http://www.moneyscience.org/tiki/tiki-read_article.php?articleId=108#1) that explains how to set up an incubator hedge fund.

Incubator Hedge Funds
There is an alternative approach for hedge fund managers who want to test the waters before spending $15k or more to set up a hedge fund. Setting up an incubator hedge fund allows a hedge fund manager to develop a track record which will assist in attracting investors later in time.
An “incubator” can be created by breaking down the hedge fund development process into two stages and isolating the first.

Stage One. The first stage sets up the hedge fund and management company, and creates the required operating documents and resolutions. Completion of the first stage allows the hedge fund to begin trading and developing an auditable performance record. The incubator fund, in nearly all cases, is seeded with the fund manager's money. By trading under this structure, the hedge fund manager develops a track record, which, once audited by an accountant, can be marketed legally to potential investors through the offering documents which are developed in the second stage.

Stage Two. In the second stage, the offering documents are developed and an audit of the fund is completed by an accountant. The offering documents, with the financial statement of the hedge fund, is circulated to prospective investors.

Starting out with an incubator method affords the opportunity for those with a skill for trading (often in their personal accounts) to break down the hedge fund development process into a cost manageable undertaking. One of the caveats of the incubator approach to launching a hedge fund is that the aspiring fund manager is not paid for trading his own money. The acceptance of third party money (and whether this is permitted depends on the state or country where hedge fund management is based), creates a fiduciary obligation and risk for which the hedge fund manager is not paid. Acceptance of third party money into an incubator fund, in the rare case when allowable, is not recommended, given the legal exposure it creates for the hedge fund manager.

The biggest issues one needs to deal with is getting a prime broker, a securities attorney, and and auditor.

As I read, here is the reason for becoming a hedge fund manager:
http://www.nytimes.com/2007/04/24/business/24hedge.html?ei=5088&en=22f49c09d1ef88eb&ex=1335067200

It is nice to have aspirations so let's see what the future holds.

JD