Hedge Funds

News & Analysis as of

IRS Affirms Treatment of Short Sales for UBTI Purposes

Since there are many hedge funds that utilize short selling as part of their investment strategy, it is important for hedge fund investors, including tax exempt organizations, to understand the U.S. tax treatment of these...more

SEC Examinations of Newly Registered Private Fund Advisers Wind Down

In testimony before Congress, SEC Chair Mary Jo White noted that she anticipates SEC staff will conclude a two-year initiative to conduct focused, risk-based exams of newly registered private fund advisers in October 2014. ...more

Hedge Funds Word of the Day™ – 10b5-1 Plan [Video]

Latham & Watkins partner Stephen Wink explains the Hedge Funds term 10b5-1 Plan, a plan used by company insiders to sell shares in the company without running afoul of restrictions on insider trading. For additional...more

SEC Settles With Hedge Fund Adviser Over Trade Allocations and Disclosures Regarding Trading and Investment Strategies

The SEC settled administrative proceedings against Structured Portfolio Management, L.L.C., a hedge fund adviser (the “Adviser”), and two of its affiliated advisers, SPM Jr., L.L.C. (“Adviser A”) and SPM IV, L.L.C. (“Adviser...more

CFTC Eliminates Barrier to Hedge Funds Using JOBS Act General Solicitation

Many hedge funds have been reluctant to use general solicitation to offer securities because of the possibility it would be inconsistent from exemptions related to CPO (commodity pool operator) regulations administered by the...more

Old Wine in New Bottles: The Emergence of the P2P Small Business Lending Securitizations

This last year has seen an uptick in activity in the peer to peer commercial loan market in the U.S., which, broadly speaking, includes loans made by non-traditional financing sources to small businesses (“P2P Commercial...more

Sovereign Litigation in Latin America: Top Five Issues To Think of When Doing Business With a Latin American Country

“We are in the soup” exclaimed, federal judge Thomas Griesa, referring to Argentina allegedly defaulting on its sovereign bonds. And so we are. According to bondholders, on July 30 of 2014, Argentina defaulted on its...more

Financial Regulatory Developments Focus - August 2014 #2

In this issue: - Derivatives - Bank Structure - Recovery & Resolution - Bank Prudential Regulation & Regulatory Capital - Financial Services - Consumer Protection - Funds...more

2014 Mid-Year Report Securities Litigation and Regulatory Enforcement

Welcome to the 2014 Mid-Year Report from the BakerHostetler Securities Litigation and Regulatory Enforcement Practice Team. Its purpose is to provide a periodic survey, apart from our team Executive Alerts, on matters we...more

CFTC Releases Rule Enforcement Review of ICE Futures U.S.

On July 22, the Commodity Futures Trading Commission released the Division of Market Oversight’s rule enforcement review of ICE Futures U.S. The rule enforcement review included the following recommendations...more

Hedge Fund COO Makes Admissions in SEC Settlement

The SEC announced that the former Chief Operating Officer at Harbinger Capital Partners LLC has agreed to settle allegations that he assisted a scheme by the firm and its owner to misappropriate millions of dollars from a...more

Congress Scrutinizes Hedge Funds’ Use of Financial Derivatives

This week the Senate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs (Subcommittee), in conjunction with the Subcommittee’s hearing on July 22, 2014, released a report on...more

Hedge Funds and Material Nonpublic Information: The Role of Deception, Duty, Breach, Personal Benefit and Knowledge in Creating...

The last thing hedge funds need is another wake up call about the risks of liability for trading on the basis of material nonpublic information. But if they did, a July 17 article in the Wall Street Journal would provide it....more

New York Jury Acquits Former Hedge Fund Manager of Insider Trading Conspiracy

In the first case of approximately 81 insider cases that the S.D.N.Y. has successfully brought alleging insider trading, a New York federal jury acquitted Rengan Rajaratnam (Rengan), a former hedge fund manager, of conspiracy...more

SEC Charges Hedge Fund Adviser with Engaging in Prohibited Principal Transactions and Retaliating Against Whistleblower

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on June 16, 2014 (the Order) against Paradigm Capital Management, Inc. (Paradigm) and its founder, Director, President and Chief...more

Corporate and Financial Weekly Digest - Volume IX, Issue 27

In this issue: - SEC Publishes Guidance for Investment Advisers and Proxy Advisory Firms Regarding Proxy Voting and Solicitation - SEC Division of Corporation Finance Issues C&DIs Relating to Accredited Investor...more

Hedge Fund Hack Results in Trade Secret Loss, and Raises SEC Reporting Issues

Data breaches may be nothing new, but they are certainly evolving into bigger and more notorious infractions. While the data breaches of yesterday may have involved accidental disclosure or disgruntled former employees, the...more

Regulators Target Insurance Company Acquisitions by Private Equity Funds

Private equity firms and hedge funds have stepped up efforts to acquire insurance companies in recent years. This has prompted regulators to increasingly air their own unease with the risks they perceive associated with such...more

SEC Makes First Finding of Retaliation in Violation of the Exchange Act’s Anti-Retaliation Rule

On June 16, 2014, the SEC entered an order (the “Order”) instituting cease and desist proceedings against an investment adviser, Paradigm Capital Management, Inc. (“Paradigm”), and Paradigm’s founder, Director, President,...more

Regulation: The New Normal for Hedge Funds?

By all accounts, hedge funds are having a great year. According to the Wall Street Journal, fund managers added a net $26.32 billion of new cash in the first quarter, the highest in almost three years. Better yet, many...more

Hushmail: Are Activist Hedge Funds Breaking Bad?

Increasingly, some activist hedge funds are looking to sell their stock positions back to target companies. How should the board respond to hushmail? The Rise and Fall of Greenmail - During the heyday of...more

Possible Offshore Deferrals for Hedge Fund Managers – IRS Confirms That Certain Stock Options and Stock Appreciation Rights Are...

The Internal Revenue Service (the "IRS") has issued Revenue Ruling 2014-18 (the "Ruling"), which generally confirms that a stock-settled stock option or stock appreciation right that is granted with an exercise/base price of...more

SEC Settles Enforcement Proceeding Against Former Portfolio Manager over Prohibited Joint Transaction Involving Registered...

The SEC settled administrative proceedings against Christopher B. Ruffle (the “Portfolio Manager”) over his role in causing The China Fund, Inc., a U.S. registered closed-end fund (the “Registered Fund”), to engage in a...more

Something Old, Something New: SEC Brings Action for Prohibited Principal Transactions and Retaliation Against Whistleblower

Clearly signaling its intention to support whistleblowers who provide actionable evidence of wrong-doing, the SEC this week settled the first case brought under the authority granted by the Dodd-Frank Act enabling...more

SEC's Enforcement Action Against Hedge Fund Adviser for Retaliation Against a Whistleblower Highlights Challenges Employers Face

After repeated warnings over the last few years that it had both the authority and willingness to do so, on June 16, 2014, the SEC brought its first enforcement action for retaliation against a whistleblower under the...more

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