What types of alternative investments are not permitted?

In Minnesota, alternative investments are defined as any investment other than publicly traded securities, corporate debt, and bank deposits. This includes items such as hedge funds, private equity investments, and venture capital. Unfortunately, not all alternative investments are permitted under Minnesota law. The state has laws prohibiting investments in certain types of hedge funds, which are considered “high-risk” by the state’s Financial Institutions Division. These include hedge funds that make frequent or aggressive use of leverage strategies such as borrowing money to buy securities, and those that invest in illiquid securities such as derivatives and structured products. Minnesota law also prohibits investments in private equity funds, investment partnerships, limited partnerships, and syndicates, as well as in any foreign investment vehicle such as a venture capital fund. Any investments in these types of alternative investments must be registered with the Minnesota Securities Commissioner and have the required disclosure documents. Additionally, the state prohibits investments in any virtual currency, such as Bitcoin. This is due to the lack of regulatory oversight and potential for security risks associated with these types of investments. Finally, state law prohibits investors from investing money in any business where they have an actual or potential ownership interest. This includes any business owned or controlled in whole or in part by the investor. This is intended to prevent conflicts of interest and unethical behavior.

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What types of alternative investments are not permitted?

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