“Best Ideas” Conference Presentations: Challenges Faced by Hedge Fund Managers Under Federal Securities Law (Part One of Two)

“Best ideas” conferences are events at which investment experts – often including hedge fund managers – make individual presentations or participate in panel discussions during which they share investment ideas, analysis and recommendations with fellow contributors and attendees.  Frequently, these conferences are organized for both educational and charitable purposes, and the net proceeds are donated to one or more non-profit organizations.  Managers who participate in these events likely do so for a variety of reasons: benefitting a particular charity, raising awareness of the attributes or shortcomings of a particular investment, sharing in the opportunity to participate in an exchange of insights with other leading professionals and demonstrating their research and/or analytical skills.  Naturally, information shared at a “best ideas” conference is available to anyone who attends.  Tickets are usually offered for sale on an unrestricted basis to the general investing public via an organizer’s website.  Accordingly, there are generally no controls over who will and will not be in attendance when information is presented.  Additionally, comments and statements made by presenters and panel members are often live-tweeted during the presentation or summarized by bloggers shortly after the presentation is concluded.  Finally, many organizers publish materials used by presenters – such as PowerPoint slides and graphs – to their websites during or soon after a conference has ended.  As a result, the information and materials that a manager prepares for the conference audience generally finds its way to a much broader, and potentially less sophisticated, consumer market.  The porous nature of this process raises a range of issues of concern for a hedge fund manager, from potential violations of general solicitation restrictions under Regulation D of the Securities Act of 1933, as amended, to compliance with antifraud and fiduciary duties under the Investment Advisers Act of 1940, as amended.  In a two-part guest article series, S. Brian Farmer, Co-Managing Partner of the Investment Management & Private Funds Practice Group at Hirschler Fleischer, and co-author John C. C. Byrne, II, identify the primary legal concerns raised by presentations at best ideas conferences and discuss how to address those concerns.  This article is the first in the series.

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