Dec. 4, 2014

Schulte Partner Stephanie Breslow Addresses Gates, Side Pockets, Secondaries, Co-Investments, Redemption Suspensions, Funds of One and Fiduciary Duty (Part One of Two)

For the last two years, the HFLR has been covering presentations by Stephanie R. Breslow at the Practising Law Institute’s annual hedge fund management program.  Breslow is a partner at Schulte Roth & Zabel LLP, co-head of its Investment Management Group and a member of the firm’s Executive Committee.  Her PLI presentations are invariably thorough, relevant, lucid, informed by a unique level of access and experience and delivered with her trademark wit.  See “Schulte Partner Stephanie Breslow Discusses Tools for Managing Hedge Fund Crises Caused by Liquidity Problems, Poor Performance or Regulatory Issues,” Hedge Fund Law Report, Vol. 7, No. 1 (Jan. 9, 2014); “Schulte Partner Stephanie Breslow Discusses Hedge Fund Liquidity Management Tools in Practising Law Institute Seminar,” Hedge Fund Law Report, Vol. 5, No. 43 (Nov. 15, 2012).  Consistent with that tradition, the HFLR is covering Breslow’s presentation at PLI’s 2014 hedge fund management program.  This year’s presentation covered a typically expansive range of topics, including fund-level and investor-level gates, side pockets, synthetic side pockets, in-kind distributions, secondary market trading in hedge fund interests, co-investments, calculating NAV after suspension of redemptions, funds of one and fiduciary duty.  Breslow used the credit crisis as a framing device for her presentation, explaining the applicability and evolution of these concepts before, during and after the crisis.  This article covers the portions of Breslow’s presentation relating to the periods before and during the crisis.

Practitioners Discuss U.S. and Canadian Shareholder Activism and Activist Tools

A recent program sponsored by law firms McCarthy Tétrault LLP and Sadis & Goldberg LLP discussed the present state of shareholder activism in Canada and the U.S., focusing on the tools available to advance activists’ agendas and the statutory and regulatory regimes that affect their use of those tools.  The program featured Sam Lieberman, a partner at Sadis & Goldberg LLP; and Tim McCafferty and René Sorell, both partners at McCarthy Tétrault LLP.  For more on activist investing, see “Can Activist Hedge Fund Managers Provide Special Compensation to Nominees That Are Elected to the Board of a Target?,” Hedge Fund Law Report, Vol. 7, No. 16 (Apr. 25, 2014); “Drawbacks of Being a Lone Dissident on a Board of Directors, Starting an Activist Campaign and Targeting Retail Investors Are Themes at Activist Investor Conference,” Hedge Fund Law Report, Vol. 4, No. 6 (Feb. 18, 2011).

Regulators from the SEC, CFTC and New York Attorney General’s Office Reveal Top Hedge Fund Enforcement Priorities (Part One of Four)

This is the first article in a four-part series covering this year’s edition of Practising Law Institute’s annual hedge fund enforcement event.  Participants at the event included regulators from the SEC, CFTC and New York Attorney General’s Office, who provided candid and detailed insight into their hedge fund enforcement priorities, principles, goals and experience.  This first article discusses the key points made by Julie M. Riewe, Co-Chief of the SEC’s Asset Management Unit, with respect to enforcement trends, principal transactions, conflicts raised by side-by-side management, valuation, allocation of expenses and the potential deterrent value of smaller enforcement actions.  The second article in this series will address CFTC enforcement concerns and cases, New York Attorney General’s Office initiatives and defense strategies for avoiding and managing government investigations.  The third article in the series will focus on SEC inspections and examinations.  And the final article will provide instruction (based on points made at the PLI event) on how to establish an effective private fund compliance program.  See also “Top SEC Officials Discuss Hedge Fund Compliance, Examination and Enforcement Priorities at 2014 Compliance Outreach Program National Seminar (Part Three of Three),” Hedge Fund Law Report, Vol. 7, No. 9 (Mar. 7, 2014); “OCIE Director Andrew Bowden Identifies the Top Three Deficiencies Found in Hedge Fund Manager Presence Exams and Outlines OCIE’s Examination Priorities,” Hedge Fund Law Report, Vol. 7, No. 38 (Oct. 10, 2014).

Factors to Be Considered by a Hedge Fund Manager When Selecting a Prime Broker

In a guest article, Lauri K. Goodwyn, Counsel in Seward & Kissel LLP’s Corporate Finance Group, identifies and analyzes the criteria to be considered by hedge fund managers in selecting one or more prime brokers.  See also “Prime Brokerage Arrangements from the Hedge Fund Manager Perspective: Financing Structures; Trends in Services; Counterparty Risk; and Negotiating Agreements,” Hedge Fund Law Report, Vol. 6, No. 2 (Jan. 10, 2013).

Weil Attorneys Discuss U.S. and E.U. Cybersecurity Risks and Compliance Issues Relevant to Private Fund Managers

The recent, widely-publicized cybersecurity breaches at major public companies such as Target, Home Depot and JPMorgan Chase have placed cybersecurity issues on the radar of both regulators and private fund managers.  Cyber breaches can give rise to regulatory, reputational and enterprise risk.  In that regard, a recent panel discussion considered the current regulatory climate on cybersecurity in both the U.S. and the E.U., and the key cybersecurity risks and compliance issues facing private fund managers.  Speakers at the discussion included Weil, Gotshal & Manges LLP partners Barry Fishley and Kyle C. Krpata, and counsel Paul A. Ferrillo.  For a comprehensive look at cybersecurity for private fund managers, see “Cybersecurity for Hedge Fund Managers: Compliance Best Practices, SEC Examinations and Cyber-Liability Insurance,” Hedge Fund Law Report, Vol. 7, No. 25 (Jun. 27, 2014).  For a discussion of specific cybersecurity threats, see “Evolving Operational Due Diligence Trends and Best Practices for Due Diligence on Emerging Hedge Fund Managers,” Hedge Fund Law Report, Vol. 7, No. 15 (Apr. 18, 2014).

Prominent Hedge Fund Attorneys Ricardo W. Davidovich and Shelley J. Rosensweig Join Haynes and Boone in New York

Ricardo W. Davidovich and Shelley J. Rosensweig recently joined Haynes and Boone in New York as partners.  Together, they bring more than 35 years of experience in advising hedge funds, investment managers and other alternative asset structures to the firm’s Investment Funds and Private Equity Practice Group.  Davidovich has been quoted in the HFLR on topics including social media, closing hedge funds, hedge fund press relations, track record portability, investor complaints, administrator shadowing, broker registration of in-house marketing departments, the custody rule and creating reserves for litigation expenses.

Stroock Enhances Investment Management Practice in L.A.

Stroock & Stroock & Lavan LLP recently announced that Yousuf I. Dhamee has joined the firm’s Investment Management practice as a partner in its Los Angeles office.  For insight from the firm, see “Aligning Employee and Investor Interests Under the Volcker Rule,” Hedge Fund Law Report, Vol. 7, No. 21 (Jun. 2, 2014); “Stroock Seminar Identifies Five Strategies for Mitigating the Risk of Supervisory Liability for Hedge Fund Manager CCOs,” Hedge Fund Law Report, Vol. 7, No. 2 (Jan. 16, 2014).

Vedder Price Expands Derivatives Capabilities in Chicago

On December 3, 2014, Vedder Price announced that Juan M. Arciniegas has joined the firm’s Chicago office as a shareholder in the Investment Services group.  Arciniegas works primarily as a derivatives lawyer and has significant experience in the market for over-the-counter derivatives, structured products and futures.  See “Eighteen Major Banks Agree to Adopt FSB/ISDA Resolution Stay Protocol that Postpones Exercise of Right to Terminate Derivatives on Bank Counterparty Failure,” Hedge Fund Law Report, Vol. 7, No. 44 (Nov. 20, 2014); “Five Steps for Proactively Managing OTC Derivatives Documentation Risk,” Hedge Fund Law Report, Vol. 7, No. 16 (Apr. 25, 2014).