Mar. 27, 2015

Sidley Austin, Ivaldi Capital and Advise Technologies Share Lessons for U.K. Hedge Fund Managers from the January 2015 AIFMD Annex IV Filing

In January of this year, many hedge fund managers faced their first “Annex IV” (transparency reporting) filings under the AIFMD.  On March 11, 2015, Hedge Fund Law Report and Advise Technologies, LLC sponsored a panel discussion in London on lessons from the first filing of specific relevance to U.K. hedge fund managers.  In particular, the panel considered the recent experiences of managers in preparing for, submitting and, if necessary, amending Annex IV; FCA guidance on Annex IV obtained in a private meeting; negotiating the general lack of availability of guidance; and allocation of the cost of Annex IV reporting.  For a discussion of allocating expenses in an analogous context, see “How Should Hedge Fund Managers Allocate Form PF Expenses Between Their Hedge Funds and Their Management Entities?,” Hedge Fund Law Report, Vol. 5, No. 25 (Jun. 21, 2012).  Panelists also offered a number of valuable lessons from their recent filing experiences and suggestions for facilitating future filings.  The program, “AIFMD Annex IV – Lessons Learned from the January Filing,” featured Nick Jarrett, Managing Partner and Chief Technology Officer at Ivaldi Capital; Leonard Ng, Partner and co-head of the E.U. Financial Services Regulatory group at Sidley Austin; and Jeanette Turner, Managing Director at Advise Technologies.  See also “Seven Tips and Lessons Learned from January 2015 AIFMD Filers,” Hedge Fund Law Report, Vol. 8, No. 6 (Feb. 12, 2015); “HFLR-Advise Technologies Panel Explores AIFMD Marketing and Annex IV Reporting Requirements,” Hedge Fund Law Report, Vol. 8, No. 2 (Jan. 15, 2015).

Five Steps That CCOs Can Take to Avoid Supervisory Liability, and Other Hedge Fund Manager CCO Best Practices

Participants at FRA’s Private Investment Funds Compliance Master Class, held on February 17, 2015 in New York City, addressed testimonials and past-specific recommendations in hedge fund marketing; whether performance should be presented net or gross of fees; presenting performance under different fee structures; use, placement and monitoring of third-party news articles; broker registration of in-house marketers and marketing departments; reverse solicitation and remuneration under AIFMD; bad actor rule compliance; three theories of CCO liability; three categories of enforcement actions involving CCOs; and five steps that CCOs can take to avoid liability.  See also “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).

Credit Suisse Hedge Fund Survey Considers Factors in Institutional Investors’ Investment and Redemption Decisions, Appetite for Alternative UCITS and Anticipated 2015 Hedge Fund Investments by Strategy and Region

Credit Suisse (CS) recently released the results of its 2015 Global Survey of Hedge Fund Investor Appetite and Activity.  With responses from nearly 400 institutional investors, the survey provides insight into the factors that drive such investors’ decisions to invest in hedge funds and redeem their interests in those funds; their appetite for alternative UCITS; their predictions and allocation plans with regard to the hedge fund industry, and their perspectives on the overall market.  This article summarizes the key takeaways from the CS survey report.  For coverage of a prior CS hedge fund survey, see “Credit Suisse Survey Reveals Allocation Preferences of Hedge Fund Investors, With Particular Attention on Preferences of Pension Funds and Insurance Companies,” Hedge Fund Law Report, Vol. 6, No. 11 (Mar. 14, 2013).  For coverage of a recent survey that focuses on manager perspectives, see “Ernst & Young’s 2014 Global Hedge Fund and Investor Survey Considers Growth Areas for Hedge Fund Managers, Related Costs and Challenges, Operating Expenses and Cybersecurity,” Hedge Fund Law Report, Vol. 8, No. 2 (Jan. 15, 2015).

SEC Chair White Identifies the SEC’s Top Concerns Arising Out of 2014 Examinations of Private Fund Managers and Alternative Mutual Funds

In testimony on March 24, 2015 before the House Committee on Financial Services, SEC Chair Mary Jo White discussed, among other topics, the SEC’s risk monitoring initiatives with respect to asset managers; potential SEC rulemaking on enhanced data reporting for funds and advisers; common deficiencies found in 2014 presence examinations of private fund managers; focus areas in 2014 examinations of alternative mutual funds; and top SEC concerns relating to cybersecurity at fund managers.  This article highlights the main points from White’s testimony on each of these topics.  See also “SEC’s Rozenblit and Law Firm Partners Explain the SEC’s Enforcement Priorities and Offer Tips on How Hedge Fund and Private Equity Managers Can Avoid Enforcement Actions (Part Three of Four),” Hedge Fund Law Report, Vol. 8, No. 2 (Jan. 15, 2015).

Faegre Baker Daniels Welcomes Investment Management Partners in Chicago

Faegre Baker Daniels recently announced that nine partners from four firms have joined its Chicago office, including a team of financial services attorneys from Ulmer & Berne: Jeffrey Blumberg, Kurt Lebakken, James Martignon and David Porteous.  For insight from FaegreBD’s Matthew L. Thompson, see “What Are Hybrid Gates, and Should You Consider Them When Launching Your Next Hedge Fund?,” Hedge Fund Law Report, Vol. 4, No. 6 (Feb. 18, 2011); “Investors Demand More Specificity in Hedge Fund Governing Documents Regarding Circumstances in which Liquidity Management Tools May be Used,” Hedge Fund Law Report, Vol. 2, No. 30 (Jul. 29, 2009); “How Can Hedge Fund Managers Prevent or Mitigate Revocations of Redemption Requests?,” Hedge Fund Law Report, Vol. 2, No. 21 (May 27, 2009); “Hedge Fund Managers Turn to Hybrid Fund Structures to Reconcile Fund Liquidity Terms and the Duration of Assets,” Hedge Fund Law Report, Vol. 2, No. 5 (Feb. 4, 2009).