Legal Question in Investment Law in California

Re: Limited Partnership

First, California has a brand-new general law covering limited partnerships, the Uniform Limited Partnership Acy of 2008, codified in the Corporations Code as sections 15900 to 15912.07. I have not yet studied it, nor do I think many lawyers have, even those who practice business law primarily or exclusively. So, you may be facing having to pay for some lawyer's initial education on the new law!

Next, your particular chosen area for this business, essentially operating a mutual fund, is regulated by state and federal securities laws. You would face stiff civil and criminal penalties for violation or disregard of these laws, and instructing on what amounts to satisfactory compliance is going to require your retaining a lawyer with expertise in the area of formation and regulation of investment companies.

I can't comment in depth on Mr. Buffett's activities, but he has doubtless taken all requisite steps to comply with the Securities Act of 1933, the Securities Exchange Act of 1934, and all other federal and state laws regulating the mutual fund, investment advisor, and/or investment company businesses.

Incidentally, I might mention that there is a category of pooled securities investment called "investment clubs" that seem to operate under a lessened degree of regulation, but I believe these are distinguished by (a) shared risk, which would not be the case with a limited partnership, and (b) being nonprofit.