Hedge fund managers planning to chaperone primary research calls in order to monitor information inflows are faced with numerous challenges. Beyond the logistical issues surrounding the creation and implementation of a chaperoning program, managers may encounter challenges when operating that program, including issues regarding complexity, recordkeeping and cost. These practical issues must be weighed against the benefits of chaperoning. In this article, the third in a three-part series, Eugene Ingoglia, Partner at Morvillo; Laurence Herman
, General Counsel and Managing Director at Gerson Lehrman Group (GLG); and Patrick Gordon, Senior Counsel at GLG, examine specific challenges that hedge fund managers may encounter when implementing a chaperoning program, weighed against the benefits gained from chaperoning. The first article
provided background on chaperoning, including a discussion of the statutory landscape, primary research and SEC guidance. The second article
addressed the potential scope of a chaperoning policy and offered practical guidance in implementing that policy. For more on chaperoning, see “Strategies for Avoiding Insider Trading Violations: A Perspective Informed by SEC Service, Private Law Firm Practice and Work as General Counsel of a Hedge Fund Manager
,” Hedge Fund Law Report, Vol. 4, No. 34 (Sep. 29, 2011).