Hedge Fund Legal & Compliance

October 6, 2017

Seward & Kissel Study Shows Side Letter Usage Rising Among Newer Managers

Side letter agreements supplementing or modifying the standard terms of a fund’s offering memorandum, subscription agreement or constitutional documents to grant preferential treatment to an individual investor, generally as a precondition of a large investment, often provide a revelatory view into the current market dynamics of the hedge fund industry. In its most recent Hedge Fund Side Letter Study, Seward & Kissel LLP found that the hedge fund industry’s use of side letters has dramat Read More »

September 22, 2017

Latest OCIE Alert Warns Advisers of Common Weaknesses in Oversight of Performance Advertising

Advertising a fund’s performance is a key aspect of soliciting new investors. Among the myriad considerations investors take into account when determining whether to invest with a hedge fund, performance is routinely cited as one of the most unambiguous key factors influencing both the initial decision to invest and the decision to remain in a hedge fund. Performance reporting, however—a potential minefield of regulatory nuances that can flummox even the most thorough of hedge fund complianc Read More »

September 8, 2017

Hedge Fund Briefings: Alternative Managers Show Uneven Attitudes Toward Compliance; Martoma Insider Trading Conviction Upheld; NYDFS Cybersecurity Rules Now in Effect; and District Court Rules LinkedIn Must Allow Web Scraping of Public Data

Hedge fund managers face ongoing scrutiny by both investors and regulators about their compliance programs, and according to the fourth annual “C-Suite Survey” by Cipperman Compliance Services, 43% of alternative managers do not believe their compliance programs would adequately survive the scrutiny of a regulatory exam. News on the compliance front is particularly cheerless for New York hedge fund managers and those in Connecticut subject to the jurisdiction of the U.S. Court of Appeals for Read More »

July 28, 2017

SEC Chair Clayton Outlines Principles Guiding His Tenure at Helm

On July 12, recently-confirmed Securities and Exchange Commission Chairman Jay Clayton gave a speech to the Economic Club of New York that set forth core principles that will guide his leadership along with specific practices the regulator will implement to effectuate those principles. While echoing the assessment his predecessor, former Chair Mary Jo White, made in January 2017 during her last public speech at the same venue, that the SEC “is today a stronger protector of investors than ever Read More »

Survey Finds Advisers Continue To Take Cybersecurity Seriously; Custody Concerns Loom Larger

The Investment Adviser Association, ACA Compliance Group and OMAM recently released the results of their 12th annual survey of the top concerns of compliance officers working at registered investment advisers. While cybersecurity continued to dominate mindshare as the “hottest” compliance topic, custody—a common compliance deficiency among registered investment advisers, according to a memo released earlier this year by the Securities and Exchange Commission’s Office of Compliance Inspec Read More »

Study Concludes Emerging Managers Profitable at Lower AUM Than Previously Thought; Explores Challenges and Growth Strategies

Emerging asset managers face a challenging road on their path to business sustainability. The chips are seemingly stacked against their success—large startup costs, ongoing infrastructure expenses and investors too skittish to risk their allocations to unproven managers all stand in the way of the asset growth and returns that managers seek. In order to better understand the challenges emerging managers face and the ways they are addressing these challenges, the Alternative Investment Manageme Read More »

July 14, 2017

Show Me the Money: Legal and Compliance Professionals Head to Banks Amid Hedge Fund Performance and Capital Raising Struggles

A few short years ago, as banks moved to comply with strict regulations under Dodd-Frank—particularly the Volcker Rule—bank employees left financial institutions for the high growth, fast-paced world of hedge funds and the concomitant large pay structures that many employees had been deprived of at banks. Now the tables have turned. Hedge funds have struggled of late with returns and, as a result, with fundraising. The consequences have been downward pressure on management fees and lower inc Read More »

June 2, 2017

FINRA’s Latest Regulatory Notice Provides Firms With Guidance On Social Media, Digital Communications

Social media has played an unprecedented role in redefining the way people connect—both with one another and with the businesses whose products and services they use. Although the impact of social media on the way hedge fund managers operate may be more uneven than it is on other businesses—hedge funds market their products to an extremely niche audience, and traditional sales channels, such as direct sales, consultants and third-party marketers, remain sufficient—regulatory agencies such Read More »

May 19, 2017

Citco Survey Indicates Continued Fundraising Challenges for Managers, Benchmarks Sales and Marketing Efforts

A survey recently published by Citco Fund Services and HFM Global sought to better understand hedge fund managers’ asset growth, distribution trends, and sales and marketing strategies in the prior 12 months, and prognosticate results in the near future. The survey results indicate that managers are still facing fundraising headwinds, but that they are slowly and steadily adapting to the new environment. This article summarizes the survey’s key points. Survey Demographics The survey, conduct Read More »

March 9, 2017

Credit Suisse Survey Reveals Appetite and Trends for Hedge Fund Investors in 2017

Last year was tough for hedge fund managers: Nearly every relevant media outlet predicted the decline of the industry, returns were down and the traditional “2 and 20” was declared dead. Despite the gloomy prognostications, global hedge fund allocations have actually reached an all-time high water mark over $3 trillion. Against this seemingly conflicting backdrop, Credit Suisse recently released “Shifting Tides: The 2017 Credit Suisse Global Survey of Hedge Fund Investor Appetite and Activ Read More »