The London Interbank Offered Rate (LIBOR), as a reference rate of interest, may be contained in the financial products that a private fund uses or trades, or to which the fund is exposed. The U.K. Financial Conduct Authority, which regulates LIBOR, will no longer require financial institutions to submit LIBOR quotations after December 31, 2021, and as a result, it is likely that LIBOR quotations after that date will not be available or will no longer be representative of the rate at which banks can borrow from other banks on an unsecured basis. Thus, advisers have a duty to understand how LIBOR will be phased out and how that transition process will affect their funds and investments. To avoid significant liability, advisers must plan for how they and the funds that they manage will respond to the transition away from LIBOR – and the coronavirus pandemic is no excuse to delay preparing for that transition. In a guest article, Morgan Lewis partner Thomas D’Ambrosio discusses the background of the end of LIBOR, spells out recommendations from the Alternative Reference Rates Committee on handling the transition and explains the SEC’s requirements for private fund advisers navigating the transition. See “How Hedge Fund Managers Can Prepare for the Anticipated ‘End’ of LIBOR
” (Aug. 24, 2017).