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    May 7, 2026

Court Rules for Investors in Lawsuit Over Negligent Hedge Fund Audits

On January 16, 2026, the Supreme Court of the State of New York issued a ruling (Ruling) in which it rejected a challenge to an arbitration panel’s findings that BDO USA LLP (BDO) and affiliates were negligent and had harmed investors by issuing clean audits of the fraudulent financial statements of several hedge funds managed by Platinum Management (NY) LLC and Platinum Credit Management L.P. In 2016, those fund managers were the targets of SEC and DOJ civil and criminal actions for fraud allegedly intended to cover up a liquidity crisis and defraud third-party bondholders. Although the investors did not directly retain the services of BDO, they successfully argued that the facts of the case demonstrated “near-privity” between them and the auditor, distinguishing their lawsuit from others in which courts have found third-party service providers immune from investor lawsuits. Although BDO has filed a notice of its intent to appeal, the lawsuit stands to have an impact on evolving views of the role of third-party service providers engaged by hedge funds. This article summarizes the Ruling, analyzes the reasons for the lawsuit’s success so far, examines changes in the standing of third-party providers once considered off-limits to lawsuits and assesses the possibility of similar lawsuits, with expert legal commentary. See “Hedge Fund Platinum Partners and Principals Face Civil and Criminal Proceedings From SEC and DOJ Over Alleged Fraudulent Valuation Practices and Liquidity Misrepresentations” (Jan. 12, 2017).

SEC Private Markets Roundtable: Fund Governance Issues for Retailization of Private Markets (Part Two of Two)

The SEC has “an important mandate to ensure the responsible retailization of private markets,” said Blair Burnett, branch chief in the SEC Division of Investment Management’s rulemaking office, at the SEC Private Markets Roundtable held on March 4, 2026. The agency seeks to “reduce regulatory barriers that prevent retail investors from accessing diverse investment opportunities in the private markets while maintaining, of course, core investor protections and appropriate safeguards,” he explained. Burnett moderated a panel focused on investment vehicles providing access to private market strategies; valuation processes and concerns; semi-liquid funds; and fee structures. This second article in a two-part series presents the key takeaways from the panel. The first article synthesized the insights from a panel focused on valuation and liquidity. See “Advances and Challenges in ‘Retailization’ of Alternative Investment Products” (Jun. 19, 2025).

Study Finds Increasing Complexity in Side Letter Terms

Seward & Kissel has issued the latest edition of its annual hedge fund side letter study (Report), which covers several dozen side letters negotiated by Seward & Kissel clients in 2025. As in prior iterations, the Report examines the characteristics of the managers and investors that entered into the side letters, as well as the most common side letter terms. “The side letter process is continuing to grow in complexity,” Seward & Kissel partner Kris Swiatek told the Hedge Fund Law Report. “As an example, there was a significant increase in the number of side letters containing three key business terms relative to our last study.” This article examines the key findings of the study, with additional commentary from Swiatek and Seward & Kissel partner Noelle Indelicato. See our coverage of Seward & Kissel’s 2021/2022, 2016/2017 and 2015/2016 side letter studies.

Trends, Catalysts and Misconceptions in Alternative Fund Tokenization

The theoretical benefits that blockchain technology can offer the private funds industry have given way to tangible, practical implementation by fund managers and others in the financial industry. Adoption has moved lockstep with – and in response to – the comfort of buy-side participants with tokenization. Over time, the rate of implementation is likely to grow as fund managers are showing increasing interest in tokenizing their private funds and otherwise embracing blockchain technology. Those insights were unveiled by research conducted by IFI Global and STM.co on private fund managers’ adoption of tokenization. This article summarizes the research findings, highlights the asset classes that are most commonly being tokenized, analyzes which buy-side participants are embracing tokenization and considers the future of blockchain technology in the private funds industry. For coverage of other IFI Global programs, see “Gauging European Investors’ Appetite for U.S. Funds and Considerations in Marketing to Them” (Aug. 29, 2024); and “Latest on Using Reverse Solicitation, Placement Agents, NPPRs and Other Potential Non‑AIFMD Options to Distribute in Europe” (Jun. 2, 2022).

SEC Charges Second Broker Who Traded on Information Stolen by a Boyfriend From Girlfriend’s Computer

In 2023, the SEC commenced a civil enforcement action against Steven Teixeira and a stockbroker acquaintance, Jordan Meadow, for trading on the basis of material nonpublic information (MNPI) pertaining to public companies that were acquisition targets. Teixeira allegedly obtained MNPI about several transactions from the unattended computer of his then live-in girlfriend, an investment bank employee. The SEC has now commenced a civil enforcement action against a friend and colleague of Meadow, Ronald Smith, with whom Meadow allegedly shared the illicitly obtained MNPI. This article details the allegations against Smith and the parallel criminal charges against him. See “SEC Charges Boyfriend and Broker With Trading on Inside Information From Girlfriend’s Computer” (Dec. 21, 2023).

Choate Adds Former Hedge Fund GC/CCO Jonathan Danziger

Jonathan A. Danziger has joined Choate as a partner in the firm’s fund formation and investment management practice. A recognized leader and strategic adviser to some of the largest and most established hedge funds, as well as emerging managers, Danziger brings deep subject‑matter expertise to Choate’s New York office. See “Designing a State‑of‑the‑Art Hedge Fund Compliance Department: Leveraging Cutting‑Edge Technology” (Jul. 20, 2023).

Most-Read Articles

Trailblazing Women – Contributions, Achievements and Observations of Outstanding Leaders

To mark International Women’s Day, Law Report Group editors, along with our colleagues across ION Analytics’ products, interviewed outstanding women in the industries and jurisdictions we cover. In this article, Jill Abitbol, Robin Barton, Rorie Norton and Megan Zwiebel profile notable women in the data privacy, cybersecurity, AI, private funds and anti-corruption law fields, including (i) Paula Howell Anderson, (ii) Gwendolyn Lee Hassan, (iii) Audrey Koh, (iv) Stacy Feuer, (v) Heather Egan, (vi) Jeewon Serrato, (vii) Stephanie Breslow, (viii) Anne Choe, (ix) Heather Wyckoff, (x) Angie Batterson, (xi) Jacqueline Eaves, and (xii) C. Dabney O’Riordan.

Enjoy reading their inspiring remarks here.