Special rules may apply to hedge funds that accept investments by “benefit plan investors” (Benefit Plan Investors) subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), or Section 4975 of the...more
We have separately discussed the common exemptions from registration of a fund manager with the Securities and Exchange Commission (SEC) as an investment adviser and from registration with the Commodity Future Trading...more
6/13/2024
/ Advertising ,
Blue Sky Laws ,
CFTC ,
Commodity Pool ,
Commodity Trading Advisors (CTAs) ,
Exemptions ,
Hedge Funds ,
Investment Adviser ,
Investment Company Act of 1940 ,
Investment Funds ,
Investors ,
Mutual Funds ,
Private Funds ,
Qualified Purchaser ,
Regulation D ,
Securities and Exchange Commission (SEC)
An initial question faced by a new hedge fund manager is whether or not registration with the U.S. Commodity Futures Trading Commission (CFTC) will be required.
Limited Trading Exemption -
CFTC Rule 4.13(a)(3), which...more
5/7/2024
/ CFTC ,
Commodity Exchange Act (CEA) ,
Foreign Currency ,
Fund Managers ,
Futures ,
Hedge Funds ,
Investment Adviser ,
NDFs ,
Registration Requirement ,
Securities and Exchange Commission (SEC) ,
Swaps ,
Virtual Currency
An initial question faced by any manager launching a hedge fund is whether or not registration as an investment adviser with the U.S. Secutiries and Exchange Commission (SEC) under the Investment Advisers Act of 1940, as...more
5/7/2024
/ Foreign Investment ,
Fund Managers ,
Hedge Funds ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Policies and Procedures ,
Portfolio Managers ,
Private Funds ,
RAUM ,
Registration Requirement ,
Securities and Exchange Commission (SEC) ,
Threshold Requirements
A key initial decision for a manager launching a new hedge fund is to decide between:
A “master-feeder” fund structure: In a typical “master-feeder” structure, an onshore “feeder” fund and an offshore “feeder” fund both...more
Seed investment deals between a new hedge fund manager and a seed investor can be a key first step to launching a first fund. In a typical seed investment deal, the seed investor commits to make a founding investment in a new...more
Different hedge fund investors have different tax concerns that must be taken into account when structuring a hedge fund and its portfolio investments. Hedge fund investors generally fall into three categories:...more
5/7/2024
/ Blocker Corporations ,
Dividends ,
Fees ,
Foreign Investment ,
Hedge Funds ,
Holding Companies ,
Investment Portfolios ,
Investors ,
Lending ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Offshore Funds ,
REIT ,
REMIC ,
Tax Exemptions ,
UBTI
Hedge Start: Key Hedge Fund Terms -
One of the first decisions faced by a new hedge fund manager is what terms to offer. The key terms to consider are liquidity terms (the terms of permitted redemptions or withdrawals...more
On October 13, 2023, the Securities and Exchange Commission adopted new Rule 13f-2 to require monthly reporting of short sale positions and activity data on new Form SHO by institutional investment managers. The new rules...more
On September 29, 2023, the CFTC approved a proposal to amend certain provisions of its regulations relating to commodity pools, specifically Rule 4.7. The proposal would be the first major change to Rule 4.7 in over 30...more
Hybrid funds offer managers the flexibility to invest in a range of assets and to offer various liquidity structures to their investors. Though not a new phenomenon, hybrid funds gained in popularity after the 2008 financial...more
If adopted, the proposals will likely impact market practices -
In a trinity of proposing releases rolled out in less than three months, the SEC has comprehensively proposed to regulate the use of derivatives and short...more
4/15/2022
/ Beneficial Owner ,
Derivatives ,
Family Offices ,
Financial Markets ,
Hedge Funds ,
Private Funds ,
Proposed Regulation ,
Regulatory Agenda ,
Regulatory Reform ,
Regulatory Requirements ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Short Sales ,
Swaps
The SEC recently proposed to require investment managers to report short sale information on a monthly basis if such activity exceeds certain thresholds, and to require broker dealers to begin to mark “buy to cover” trades...more
3/24/2022
/ Broker-Dealer ,
Financial Markets ,
Form 13F ,
Investment Adviser ,
Investment Management ,
Proposed Rules ,
Regulatory Agenda ,
Reporting Requirements ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Short Sales
On February 9, 2022, the U.S. Securities and Exchange Commission (the "SEC") proposed new rules and amendments to existing rules (the "Proposed Rules") under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers...more
The SEC prevailed on a motion to dismiss a closely watched lawsuit alleging that a company employee had engaged in insider trading based on news about a not-yet-public corporate acquisition when he purchased securities of a...more
On March 5, 2021, the SEC release adopting broad changes to rule 206(4)-1 under the U.S. Investment Advisers Act of 1940 was published in the federal register...more
This yearly report provides a summary of some of the significant changes and developments that occurred in the past year in the hedge fund and private equity spaces, as well as certain recommended practices that investment...more
Hybrid fund structures, which can combine elements of both open-ended hedge funds and closed-end private equity funds, have become increasingly common in the current market environment. Their more flexible terms as to...more
On December 22, 2020, the Securities and Exchange Commission (“SEC”) adopted amendments to existing Rule 206(4)-1 (the “Advertising Rule”) and rescinded Rule 206(4)-3 (the “Cash Solicitation Rule”) under the Investment...more
2/10/2021
/ Books & Records ,
Cash Solicitation Rule ,
Disclosure Requirements ,
Final Rules ,
Form ADV ,
Investment Advisers Act of 1940 ,
New Rules ,
Recordkeeping Requirements ,
SEC Advertising Rule ,
Securities and Exchange Commission (SEC) ,
Securities Regulation
Overview -
The BE-180 report issued by the U.S. Commerce Department’s Bureau of Economic Analysis (the “BEA”) is a five-year benchmark survey that collects data on transactions between U.S. financial services providers...more
9/29/2020
/ BE-180 ,
Benchmarks ,
Broker-Dealer ,
Bureau of Economic Analysis ,
Filing Deadlines ,
Financial Institutions ,
Financial Services Industry ,
Fund Managers ,
Hedge Funds ,
Investment Adviser ,
U.S. Commerce Department
On July 10, 2020, the Securities and Exchange Commission (“SEC”) proposed significantly increasing the reporting threshold requiring the filing of a Form 13F to $3.5 billion, a 35-fold increase from the current threshold....more
7/14/2020
/ Comment Period ,
Corporate Governance ,
De Minimis Claims ,
FOIA ,
Food Marketing Institute v Argus Leader Media ,
Form 13F ,
Investment Adviser ,
Proposed Rules ,
Publicly-Traded Companies ,
Securities and Exchange Commission (SEC) ,
Threshold Requirements
In April, the National Futures Association (NFA) provided relief to permit commodity trading advisors (CTAs) who are also registered as investment advisers with the Securities and Exchange Commission (SEC) to provide...more
On April 7, 2020, the Securities and Exchange Commission's (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a risk alert in connection with upcoming examinations that will focus on compliance with Form...more
Background -
On January 27, 2020, the U.S. Securities and Exchange Commission's Office of Compliance Inspections and Examinations ("OCIE") published its Cybersecurity and Resiliency Observations. Cybersecurity and data...more
2/10/2020
/ Broker-Dealer ,
Corporate Governance ,
Cyber Incident Reporting ,
Cybersecurity ,
Data Loss Prevention ,
Data Privacy ,
Data Protection ,
Data Security ,
OCIE ,
Policies and Procedures ,
Registered Investment Advisors ,
Risk Alert ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Security Risk Assessments ,
Vendors
Last week, the SEC's Office of Compliance Inspections and Examinations released its 2020 Exam Priorities with a number of areas of interest to private fund managers. OCIE reported that it examined 15% of registered investment...more
1/15/2020
/ Anti-Money Laundering ,
Conflicts of Interest ,
Cybersecurity ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
Investment Adviser ,
OCIE ,
Personally Identifiable Information ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Standard of Conduct