Insights

  • September 22, 2016

    Practical, Legal and Regulatory Considerations for a Hedge Fund Manager’s Web Presence

    Historically, hedge fund websites have been little more than a page that displayed a fund manager’s name, basic contact information and a login area for investors. However, as managers, their employees and investors have become more web savvy, and implementation of the Jumpstart Our Businesses Act has galvanized the hedge fund communications landscape, hedge fund websites have become more informative and interactive. Correspondingly, the risks—legal, regulatory and even cyber-related—have grown. Hedge fund managers need to ensure that their firm’s site conforms with all relevant regulations governing what information can, and cannot, be included on a website, and who is permitted to access various kinds of information. This article details the legal and regulatory considerations surrounding a generally-accessible and interactive website, what information can and should be included on it, risks and regulations firms maintaining a website need to consider and best practices for complying with those regulations and avoiding common risks. Read More »

  • September 15, 2016

    Tailoring a Human Resources Strategy to Your Hedge Fund’s Needs (Part 2 of 2)

    Human resources tends not to receive the attention that it rightfully should, and yet the price of a hedge fund not having a bespoke HR strategy in place is only increasing. Ensuring that policies, procedures and employment and confidentiality agreements are carefully crafted and implemented is an ongoing priority, as the National Labor Relations Board’s complaint against Bridgewater Associates this summer warns. This article, the second in a two-part series on HR issues hedge fund managers contend with, will outline how hedge fund managers are currently handling certain HR issues, considerations for determining when and what HR functions to outsource and best practices for hedge fund managers implementing a human resources strategy. The first article examined the HR functions most relevant to hedge fund managers, key laws and regulations with which HR operations must contend and comply, and HR-related critical risks hedge fund managers face. Read More »

  • September 15, 2016

    Conversations With Executive Search Firms Highlight Current Compensation and Hiring Trends for Hedge Fund Legal and Compliance Staff

    Hiring and compensation of legal and compliance personnel at hedge fund managers is complex, as these are now required positions in today’s regulatory environment, and accordingly, the trends show that hiring and compensation are currently steady. In light of the current market conditions, Hedge Fund LCD spoke with Justin Mandel, Justin Mandel, co-founder and head of the asset management legal and compliance practice at executive search firm, JW Michaels, and Tessa Deutsch, managing director and head of Legal and Compliance at Glocap Search, about the overall market for and compensation of legal and compliance personnel, including GCs, CCOs, dual-hatted GCs/CCOs, and junior legal and compliance personnel. This article also describes what the market is revealing in terms of common backgrounds of GCs and CCOs; the factors considered when determining appropriate compensation for legal and compliance professionals; common reporting lines for GCs and CCOs; how bonus compensation is typically structured; and how compensation of hedge fund GCs and CCOs compares to compensation of similar personnel at private equity firms. Read More »

Legal Proceedings & Laws

  • September 22, 2016

    Unexpectedly, Fee and Expense Enforcement Action Highlights Sound Remedial Practices Firms Should Follow

    On September 14, 2016, the Securities and Exchange Commission issued yet another admonition regarding one of this year’s hot topics, fee and expense disclosures, in the form of an enforcement action against a private equity fund. At first blush, the case against may appear redundant. But the SEC’s enforcement proceeding is distinguishable from other fee and expense actions this year because the SEC repeatedly remarks upon the firm’s voluntary remediation efforts and cooperation. Improbably, an otherwise routine enforcement action serves as a guide for sound practices private funds can take once they’ve uncovered fee and expense discrepancies. This article examines the firm's missteps and how it garnered favor with the SEC for correcting them. Read More »

  • September 15, 2016

    ESMA Offers Last Chance to Comment on Potentially Far-Reaching EU Custody Proposal

    Hedge fund depositaries and their delegates have just over a week to persuade the European Securities and Markets Authority not to adopt potentially burdensome new rules on asset segregation and custody services—including a broader regulatory definition of the term “custody” that could ensnare firms all down the custody chain. The changes, first proposed in 2014, could have a significant impact on the holding of alternative investment fund and UCITS assets, increasing both expenses and complexity for depositaries (and the hedge fund managers who ensure their compliance with the law)—and it seems that ESMA may be inclined to move forward with them. This article, with insight from Andrew Massey, partner at K&L Gates, digests the potential impact of ESMA’s recommended new rules on asset segregation and custody services. Read More »

Summary & Synthesis

September 22, 2016

Hedge Funds Face Liability, Uncertainty Under New Derivatives Market Insider Trading Crackdown

For most of their history, “insider trading” wasn’t anything to fear in the commodities and derivatives markets. In fact, it was seen as a fundamental part of the process of making markets in such instruments. Since the global financial crisis, however, this longstanding understanding has been overturned by a series of new rules, regulations and enforcement actions. And it is not merely the swap dealers and futures commodity merchants who may be implicated by the new standards. Clients, including hedge funds, could face the sort of sanctions that until now have been limited to the “tippee” in securities insider trading cases. Unfortunately, there is significantly less than perfect clarity as to what is and isn’t permitted under the developing regime. This still-uncertain nature, and the considerable risks it entails for commodity market participants, was the subject of a recent webinar, hosted by FIA and featuring Cadwalader Wickersham & Taft attorneys Paul Pantano, Anthony Mansfield and Neal Kumar, seeking to bring some coherence to the situation. This article summarizes their insights. Read More »

September 22, 2016

AIMA Urges Flexibility In Aligning Client-Manager Interests

While lower fees and greater transparency can certainly eat into a firm’s bottom line, these terms can also be used to build stronger, more durable relationships with clients, according to a new paper, “In Concert,” published by the Alternative Investment Management Association. This article reports AIMA’s findings on how firms are turning demands into opportunities by crafting customized products for institutional investors. Read More »

News

  • September 22, 2016

    SEC Report Provides Updates to Agency’s Use of Form PF Data, Private Fund Statistics

    The SEC recently released its fourth annual staff report detailing the evolving ways in which the Commission utilizes the data it collects from Form PF filings, as well as detailed “statistics” from the private funds that file. This article summarizes the key takeaways from the report. Read More »

  • September 8, 2016

    Active August: SEC Approves ADV Changes, New Broker Type; Targets Anti-Whistleblower Provisions, Fee Disclosures

    The balmy, waning dog days of summer are not a period conspicuously known for activity. But the Securities and Exchange Commission has kept busy with a raft of important rule changes, enforcement actions and investigations. Last month alone, the SEC adopted a series of changes to hedge fund managers’ main public disclosure, Form ADV, and to its books and records rule, while also striking five settlements emphasizing some of its current areas of focus. But the news was not all bad for hedge funds and other investment advisers: The SEC has streamlined the Form ADV process for some managers, while also approving a new type of Financial Industry Regulatory Authority-registered broker with fewer restrictions. This article reviews the regulator’s most recent rulemaking and enforcement activities and assesses their impact on hedge fund managers. Read More »

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