Articles By Topic
By Topic: Confidentiality Agreements
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From Vol. 5 No.28 (Jul. 19, 2012)
Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part Three of Three)
Confidentiality or nondisclosure agreements (NDAs) are pervasive in the hedge fund industry, but little understood and inadequately analyzed. They are often perceived as adhesion contracts or ministerial impasses to trades or deals. But NDAs can actually affect the economics of deals, the marketability of assets and the flow of material nonpublic information into and out of a management company. Hedge fund managers should think harder than they typically have about NDAs. To help them do so, we are publishing this third installment in a three-part series by William G. Frenkel and Michael Y. Sukhman, both partners at Frenkel Sukhman LLP, on key legal and business considerations in drafting and negotiating confidentiality agreements. This last article in the series covers remedies, damages and liability in connection with NDAs and non-confidentiality provisions typically included in NDAs. The second article in this series discussed: the scope of permitted disclosure of information obtained pursuant to NDAs; the terms of permitted disclosure; the scope and terms of required disclosure; and four important considerations with respect to the return and destruction of documents. See “Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part Two of Three),” The Hedge Fund Law Report, Vol. 5, No. 17 (Apr. 26, 2012). And the first article in this series focused on: the “market” for duration provisions; events that trigger expiration of confidentiality obligations; four key elements of the definition of confidential information; and four typical carve-outs from the definition of confidential information. See “Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part One of Three),” The Hedge Fund Law Report, Vol. 5, No. 15 (Apr. 12, 2012).
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From Vol. 5 No.17 (Apr. 26, 2012)
Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part Two of Three)
Confidentiality or nondisclosure agreements (NDAs) can have powerful legal and practical consequences for hedge fund managers. Drafting or monitoring missteps can, among other things, significantly constrain the ways in which information can be used, can put a manager at risk of insider trading violations and can limit investment exit opportunities. This article – the second in a three-part series – discusses: the scope of permitted disclosure of information obtained pursuant to NDAs to six categories of common recipients in the hedge fund context; the terms of permitted disclosure to each of those six types of recipients; the scope and terms of required disclosure; and four important considerations with respect to the return and destruction of documents. The first article in this series outlined the case for the importance of NDAs in the hedge fund industry and discussed: the “market” for duration provisions; events that trigger expiration of confidentiality obligations; four key elements of the definition of confidential information; and four typical carve-outs from the definition of confidential information. See “Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part One of Three),” The Hedge Fund Law Report, Vol. 5, No. 15 (Apr. 12, 2012). The third article in this series will discuss remedies, damages and liability and non-confidentiality restrictions in NDAs.
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From Vol. 5 No.15 (Apr. 12, 2012)
Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part One of Three)
Hedge fund managers frequently have occasion to enter into confidentiality agreements or nondisclosure agreements (collectively, NDAs). For example, distressed debt hedge fund managers often enter into NDAs before obtaining borrower financial statements and sales projections; managers that take control positions in companies often enter into NDAs before taking a “deep dive” into target company data; and managers that invest in real estate often enter into NDAs before obtaining tenant, property and related information. These are just three of the many instances in which NDAs come into play in day-to-day investment analysis by hedge fund managers. NDAs are ubiquitous, but typically receive surprisingly little attention from investment and even legal staff at managers. NDAs are viewed as a bothersome chore – a box to be checked – rather than a fundamental aspect of the investment process. But that view is dangerously mistaken. NDAs can have powerful legal and practical consequences. Drafting or monitoring missteps can, among other things, significantly constrain the ways in which information can be used, can put a manager at risk of insider trading violations and can limit investment exit opportunities. This article seeks to shed light on the NDA process, a critical but underappreciated aspect of the hedge fund business. It is the first in a three-part series being published in The Hedge Fund Law Report by William G. Frenkel and Michael Y. Sukhman, principals at the law firm Frenkel Sukhman LLP. Specifically, this article starts by identifying six discrete rationales for the importance of NDAs in the hedge fund context, then goes on to discuss: the “market” for duration provisions; events that trigger expiration of confidentiality obligations; four key elements of the definition of confidential information; and four typical carve-outs from the definition of confidential information. The second article in this series will discuss: the scope of permitted disclosure of confidential information; return and destruction of documents; and required disclosure. And the third article in this series will discuss remedies, damages and liability, and non-confidentiality restrictions in NDAs.
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