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Ok, diving into hedge fund law and the highlights. First, on the separately managed account item, that issues is governed by STATE law, until you have over $125m in clients (can be less, but at that level you have to federally register). In Texas, the rule is you don't have to register until you have 5 or more clients in the state AND you don't have an office in the state AND you don't meet with the residents of Texas in Texas. If you do that, you don't have to register. In some states, you have to register as soon as you get one client in that state. In other states, you're exempt if you are registered in one state and have under X number of clients out there. This is a dangerous area of the law because the rules differ state by state. There is no conceivable scenario where this guy had over 100 clients and did not have to register. To avoid registration, he COULD have set this up as a hedge fund -- meaning a legally entity -- but he did not. Typically you do not have to register a fund under Regulation D, but you DO have to file an exemption notice. This is a piece of paper you file through Edgar (federal registration system) claiming the exemption. In 2013, Rule 506(c) went into effect. If you are a Rule 506(c) fund, then you CAN advertise. However, you can only have accredited investors and actually verify they are accredited. 506(b) is the old rule, under which you could have 35 unaccredited investors (but they have to be sophisticated) and unlimited accredited investors. You do NOT have to verify the accreditor investor status, that can be self-certified (meaning the investor can just tell you they are accredited). Then there are other rules on when you can charge a performance fee (typically only to qualified clients -- which are basically "super accredited investors"). And even if you don't have to register the fund, depending on what state you do business in, you might STILL have to register as an adviser. For instance, in Texas, if your fund has more than five clients, the FUND does not have to be registered, but the fund MANAGER must be a licensed investment advisor. Unless its a real estate fund, in which case different rules apply. There's a reason securities lawyers make a lot of money -- the rules are messy, differ state to state and federally, and it's easy to screw things up and get in trouble. However, there is no chance, running separately managed accounts, advertised online, that this guy would not have been required to register by law. Not to mention the liability possibilities with doing this all without adequate disclosures in place.

What also amazes me is that he is not registered (as far as I could tell on BrokerCheck) as either a broker or RIA. Which means HOW THE HECK did he even get permission to trade this accounts? I'm guessing its the same online shenanigans that you see with a lot of "advisory services" out there, but I wouldn't be surprised if there's not a coming criminal investigation to him not being properly registered. Boggles my mind. And infuriates me -- the amazing level of scrutiny we get on EVERYTHIGN (down to font sizes on pages), while a very large number of people don't even ATTEMPT to comply with the rules. I would MUCH rather see various state securities boards to be investigating and pursuing those who refuse to play by any rules as opposed to subjecting those who do everything they can to audits and fines for not having your license hung at the right height off the floor or not having proper margin sizes on investor bills.