What sort of legal structure should be used?
The simplest, least expensive, least complicated form for an investment limited partnership (“Hedge Fund”) is a limited partnership with an individual general partner. Many investment managers do not like this form because it does not offer the “appearance” of limited liability. Many prefer a limited partnership with a limited liability company as the general partner or even a limited partnership with a limited liability company as its general partner serving as the general partner of the Hedge Fund. The use of a limited liability company as a general partner of the Hedge Fund or as the general partner of the general partner of the Hedge Fund gives the “appearance” of limited personal liability. We use the word “appearance” in quotation marks because many of the unexpected liabilities which a general partner might have in running a Hedge Fund are liabilities under the securities laws for which he or she can be held to be personally liable irrespective of the legal form of the entity wh
