Jun. 27, 2019

A Checklist for Advisers to Comply With New York’s Anti‑Sexual Harassment Training Requirements

Both New York State (NYS) and New York City (NYC) have enacted new laws imposing anti-sexual harassment requirements on private employers based in New York. The NYS and NYC laws have several common requirements, including that employers train their employees on preventing sexual harassment. NYS previously released final versions of model sexual harassment prevention materials that employers may adapt and use to comply with the new training requirements. See “New York State Releases Final Anti-Sexual Harassment Model Policy and Training Materials” (Nov. 15, 2018). More recently, on the date the NYC anti-sexual harassment training requirements took effect, the NYC Commission on Human Rights issued updated frequently asked questions and an online training video. This article reviews the basic requirements of both the NYS and NYC sexual harassment laws; explains the training requirements under each law; and provides a checklist that investment advisers based in New York can use to ensure that their anti-sexual harassment training complies with both NYS and NYC requirements. For more information on the NYS and NYC sexual harassment requirements, see “What Fund Managers Need to Know About Recent Developments to the New Anti-Sexual Harassment Policy and Training Requirements in New York City and New York State” (Sep. 13, 2018); and our two-part series: “Key Elements of New York’s New Anti-Sexual Harassment Policy and Training Requirements” (Jun. 14, 2018); and “Ways Fund Managers Can Comply With New York’s New Anti-Sexual Harassment Policy and Training Requirements” (Jun. 21, 2018).

Understanding the Wells Process: The Pre‑Wells Process Versus the Post‑Wells Process (Part Three of Three)

The Wells process has been in place at the SEC, both officially and unofficially, for many years. Since the Dodd-Frank Act took effect in 2010, however, the process before Enforcement Division (Enforcement) staff formally issues a Wells notice to the subject of an investigation has taken on greater importance. In many cases, it is in everyone’s best interest to resolve an investigation before a Wells notice is issued and the clock on the 180‑day deadline starts to tick. In addition, the so-called pre-Wells process provides more flexibility to defense counsel, who, for example, are not bound by the limits on Wells submissions during this process. This final article in our three-part series demystifying the Wells process explores the increasingly important pre-Wells process and the key steps of the pre- and post-Wells processes, including ways for a manager to determine whether to offer a Wells submission in response to a Wells notice. The first article discussed the origins of the Wells process and its key elements, as well as the impact of Dodd-Frank, and the second article examined the views of members of Enforcement on the Wells process. See “Is This an Inspection or an Investigation? The Blurring Line Between Examinations of and Enforcement Actions Against Private Fund Managers” (Mar. 29, 2012).

Cayman Economic Substance Has Arrived: Steps In‑Scope Fund Managers Must Take to Respond

The International Tax Co‑operation (Economic Substance) Law, 2018 (ES Law) came into force in the Cayman Islands at the start of 2019. The ES Law requires certain types of Cayman entities that are engaged in specified activities – including “fund management business” – to meet requirements for “economic substance” in the Cayman Islands. The satisfaction of the economic substance requirements will be a question of fact, and there will not be a one-size-fits-all approach. Whether the requirements are satisfied will depend on the size and nature of the business, both in the Cayman Islands and in other locations, in addition to expected gross income in the Cayman Islands. In a guest article, Appleby partners David Lee and Christian Victory explore the ES Law, the relevant requirements and the steps that managers should take now to ensure compliance with the ES Law. For additional commentary from Lee and Victory, see “How Funds Formed in the Cayman Islands Can Mitigate Legal Risk by Aligning Their Constitutional Documents and Operations” (Oct. 11, 2018). For coverage of other Cayman-related issues, see “Recent Cayman Grand Court Decision Signals That Fund Managers Should Review Indemnification Provisions in Governing Documents” (Apr. 11, 2019); and “Investors in Cayman Funds Have Limited Access to Fund Documents, Records and Information Under Cayman Law” (Dec. 20, 2018).

Establishing and Marketing Private Funds in the E.U. Under AIFMD: Key Provisions (Part One of Two)

Although U.S. managers may ostensibly market private funds into the E.U. under the national private placement regimes of the member states, it is difficult, if not impossible, to do so in many jurisdictions. Managers that wish to market freely across the E.U. have little choice but to establish an E.U.-based fund and manager in order to take advantage of the marketing passport available under the Alternative Investment Fund Managers Directive (AIFMD). A recent Carne Group seminar offered an overview of establishing and marketing private funds in the E.U. under AIFMD. The program featured Ajay Pathak and Glynn Barwick, partner and counsel, respectively, at Goodwin Procter; Edwin Chan, senior vice president at Northern Trust; and Aymeric Lechartier, managing director at Carne Group. This article, the first in a two-part series, analyzes the key provisions of AIFMD. The second article will compare Ireland and Luxembourg as private fund venues; outline the costs and logistics of establishing an E.U. fund; address whether to hire a third-party E.U. fund manager; and review the current state of private placements and reverse solicitation in the E.U. See “KPMG Reports on AIFMD’s Efficacy Five Years After Implementation” (May 30, 2019).

Deutsche Bank 2019 Alternative Investment Survey Details Additional Allocation Preferences, Fees and Early Stage Investing (Part Two of Two)

In its 17th annual global alternative investment survey, Deutsche Bank Global Prime Finance (DB) analyzed responses from 425 allocators that manage or advise roughly $1.74 trillion of hedge fund assets. This second article evaluates the portions of the DB survey report that cover additional allocation preferences, including with respect to investment vehicles, region and strategy; the continued decline in hedge fund fees; and early stage investing. The first article covered observed and expected performance and allocation preferences, including with respect to environmental, social and governance products; initial and target allocation sizes; and minimum fund size. For coverage of previous editions of DB’s annual survey, see our two-part coverage of the 2015 survey: Part One (May 21, 2015); and Part Two (Jun. 4, 2015); and our coverage of the 2013 survey: “Deutsche Bank Survey Describes the Contours of the Nontraditional Hedge Fund Product Market: Investor Appetite, Performance, Marketing, Fees and More” (Jan. 23, 2014).

K&L Gates Adds Global Derivatives Lawyer to Washington, D.C., Office

K&L Gates has welcomed Stephen Humenik to its Washington, D.C., office. As a partner in the investment management, hedge funds and alternative investments practice, as well as the derivatives and structured products practice, Humenik advises a diverse range of clients, including asset managers; hedge funds; swap dealers; financial institutions; trading platforms; commodity and corporate end-users; trade associations; and cryptocurrency and financial technology companies on CFTC regulations. For additional insights from Humenik, see “NFA Notice Provides Cybersecurity Guidance to Hedge Fund Managers Registered As CPOs and CTAs” (Nov. 19, 2015).