Impact of Hedge Fund Redemptions Under ERISA

Many hedge funds avoid regulation under the Employee Retirement Income Security Act of 1974, as amended, by maintaining participation by “benefit plan investors” below 25% of the value of each class of equity interest issued by the fund.  For such funds, it is important not to lose sight of the requirements for satisfying the 25% test, in light of an unprecedented number of redemption requests due to general turmoil in the financial markets.  In a guest article, Willkie Farr & Gallagher LLP provides timely and important reminders on how to remain in compliance with the 25% test, even in the presence of substantial redemptions by benefit plan investors and non-benefit plan investors.

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