Seward & Kissel Private Funds Forum Explains How Managers Can Prevent Conflicts of Interest and Foster an Environment of Compliance to Reduce Whistleblowing and Avoid Insider Trading (Part Two of Two) 

The SEC has recently pursued significant enforcement actions for conflict of interest and insider trading violations, in addition to matters brought via the whistleblower program introduced in 2010 under the Dodd-Frank Act. In response, it is important for fund managers to implement safeguards to avoid becoming subject to SEC scrutiny. These issues, and practical measures that fund managers can adopt accordingly, were among the items addressed by a panel at the second annual Private Funds Forum produced by Seward & Kissel and Bloomberg BNA, held on September 15, 2016. Moderated by Seward & Kissel partner Patricia Poglinco, the panel included Laura Roche, chief operating officer and chief financial officer at Roystone Capital Management; Scott Sherman, general counsel at Tiger Management; and Rita Glavin and Joseph Morrissey, partners at Seward & Kissel. This second article in a two-part series explores the SEC’s targeting of various conflict of interest scenarios, provides an overview of the status of the SEC’s whistleblower program and examines the difficulty of prosecuting insider trading. The first article addressed the inflow and outflow of material nonpublic information, risks related thereto and the ways that fund managers can ensure it is not improperly used. For additional insight from Seward & Kissel attorneys, see “What D&O and E&O Insurance Will and Will Not Cover, and Other Hot Topics in the Hedge Fund Insurance Market” (Jul. 14, 2016); and “The First Steps to Take When Joining the Rush to Offer Registered Liquid Alternative Funds” (Nov. 6, 2014). For commentary from Poglinco, see “How Studying SEC Enforcement Trends Can Help Hedge Fund Managers Prepare for SEC Examinations and Investigations” (Sep. 8, 2016). For more from Sherman, see “RCA Symposium Clarifies Current Market Practice on Side Letters, Conflicts of Interest, Insider Trading Investigations, Whistleblowers, FATCA and Use of Managed Accounts Versus Funds of One (Part One of Two)” (Jun. 13, 2013).

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