As fund managers reopen their offices, what can they ask employees about coronavirus vaccines and tests? What can managers require of employees? How should any information gathered be handled internally, and how can it be disclosed externally? This second article in our two-part series answers those questions and others to shed light on fund managers’ obligations and risks related to gathering, storing, providing access to and disclosing coronavirus-related employee data. The first article explored the applicable privacy and employment laws and provided steps managers can take to find the right balance when developing vaccine and testing policies. See “How Fund Managers Can Withstand the Coronavirus Pandemic: Marketing Disruptions, Key Person Clauses and Cybersecurity Concerns (Part Two of Three)” (Apr. 9, 2020). Read full article …

The European Commission has introduced new rules on the cross-border distribution of funds (CBDF Rules), which apply in the E.U. as of August 2, 2021. The CBDF Rules are intended to remove regulatory obstacles that prevent more active cross-border flow of capital within the E.U. and introduce regulatory certainty to allow for more market testing activity, so fund managers can confirm investor interest before embarking on marketing registration under the Alternative Investment Fund Managers Directive and its attendant regulatory requirements. Although equivalent rules are not currently being implemented in the U.K., the CBDF Rules are likely to have at least some impact on many U.K. managers’ marketing activities in the E.U. Similarly, U.S. and other non-E.U. managers should assess what impact the CBDF Rules may have on them. In a guest article, Akin Gump partner Ezra Zahabi discusses the key provisions of the CBDF Rules as they relate to pre-marketing activities, reverse solicitation, marketing to non-professional investors and marketing communications. For additional commentary from Akin Gump attorneys, see “How Do You Put a System of Privacy and Security Controls in Place When Your Target Keeps Moving?” (Jul. 22, 2021). Read full article …

Asset managers striving to meet the ever-increasing demand for sustainable business practices and responsible investment options face multiple challenges, including a lack of standardized terminology and metrics; the risk of so-called “greenwashing”; and a multiplicity of regulatory approaches. As part of its continuing work in this area, the International Organization of Securities Commissions (IOSCO) recently released a Consultation Report on ESG/Sustainability Disclosure and Practices, which focuses on how regulators can work to improve asset managers’ sustainability-related practices and their associated policies, procedures and disclosures, both at the firm level and the product level. This article, the first in a two-part series, analyzes the risk of greenwashing and the various regulatory approaches to sustainability-related practices and disclosures. The second article will review investor education, impediments to the development of sustainable products and IOSCO’s recommendations and requests for input. See “Manager and Investor Interest in ESG Is Growing, According to Recent Global Hedge Fund Study (Part Two of Two)” (May 20, 2021). Read full article …

At the recent FRA Private Investment Fund Tax Master Class, a panel of tax professionals considered the tax ramifications of several common investment strategies employed by hedge funds. Panelists Mark Fichtenbaum, president of MF Consulting and a clinical assistant professor at Pace University; Lisa K. Head, partner at Weaver LLP; and E. George Teixeira, partner at Anchin Block & Anchin LLP, explored the rules for wash sales, straddles, constructive sales, collars and swaps; techniques for avoiding the traps set by some of those rules; and partnership tax allocations. This article distills their insights. For coverage of another panel at that event, see “How Fund Managers Can Ensure They Have Effective Tax Disclosures in PPMs” (Jul. 22, 2021). Read full article …

Two years after releasing its first-of-its-kind cybersecurity regulations for the financial services industry, the New York State Department of Financial Services (NYDFS) created a Cybersecurity Division. The Division’s Executive Deputy Superintendent, Justin Shibayama Herring, recently spoke to Davis Polk partner Robert A. Cohen, former chief of the SEC’s Cyber Unit, about the Division’s examination and enforcement focus, including lessons from recent cases; navigating the panoply of cyber regulations and incident reporting challenges; and best practices when adopting affiliates’ cybersecurity programs. This article presents Herring’s thoughts on the foregoing. In light of New York State’s prominent role in financial and insurance markets, as well as the fact that the NYDFS’ regulations generally govern the activities of any New York-licensed entity, those regulations have widespread impact, and its cybersecurity regulations are widely seen as a potential template for broader regulatory cybersecurity expectations. For more on the NYDFS, see “Proposed Expansion of New York Department of Financial Services Could Impact Hedge Funds” (Apr. 16, 2020). Read full article …