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    Mar. 24, 2016

New Appointments at Travers Thorp Alberga

Travers Thorp Alberga has announced several new lateral hires, including Lucy Nicklas, Silva Seferian Jacotine and Jonathan Turnham. Nicklas, who joins as a partner in the Hong Kong office, advises on a diverse range of vehicles including long/short equity funds, funds-of-funds, single-investor funds, quant funds, hybrid funds, and closed-end funds utilizing partnership structures. For more on quant funds, see our series on hedge fund managers and automated trading strategies: “Examining and Documenting” (Jan. 7, 2016); and “Monitoring and Reviewing” (Jan. 14, 2016). Jacotine, a hedge fund specialist of similar standing who will join the hedge fund group as a partner in the Cayman Islands office at the end of May, assists with the formation, management, restructuring and termination of all types of Cayman Islands investment funds, including hedge funds, unit trusts and private equity vehicles. Turnham joins the firm in the Cayman Islands office as a hedge fund group senior associate.

Stradley Ronon Adds Four Investment Management Partners and Opens Chicago Office

Stradley Ronon recently announced the opening of a Chicago office with the hiring of David P. Glatz and Alan P. Goldberg, both of whom join the firm as partners in the investment management group. In addition to the Chicago-based partners, Eric S. Purple and Nicole Trudeau have joined Stradley Ronon’s Washington, D.C., office as partners in the investment management group. For insight from firm practitioners, see “FRA Liquid Alts 2015 Conference Highlights ’40 Act Fund Structures and Regulatory Concerns with Alternative Mutual Funds (Part Two of Three)” (May 7, 2015); “Eight Important Regulatory and Operational Differences Between Managing Hedge Funds and Alternative Mutual Funds” (Nov. 20, 2014); and “How Can Hedge Fund Managers Use Advisory Committees to Manage Conflicts of Interest and Mitigate Operational Risks? (Part Two of Two)” (Apr. 25, 2013).

How Hedge Funds Can Mitigate FIN 48 Exposure in China (Part Two of Three)

In an increasingly global market, hedge funds must keep up with numerous tax issues when investing in non-U.S. securities, including withholding on interest, dividends and capital gains, as well as the fund’s exposure under FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). In addition to regimes developing in the E.U., China has taken positions that are helpful to hedge funds, although significant issues remain for foreign hedge funds investing in Chinese securities. In this guest three-part series, Harold Adrion of EisnerAmper discusses foreign withholding taxes and FIN 48 exposure applicable to hedge funds. This second article focuses on the limited exemption from capital gains taxation for non-Chinese residents and other issues faced by non-resident investors. The first article explained FIN 48 and explored E.U. developments regarding free movement of capital and its impact on funds. The third article will address developments in Australia and Mexico, and how hedge funds can minimize exposure to withholding taxes in those jurisdictions. For more on investing in Chinese securities, see “China Launches Landmark Reforms Impacting Hedge Fund Capital Raising, Investments and Operations” (Aug. 2, 2012); and “Questions Hedge Fund Managers Need to Consider Prior to Making Investments in Chinese Companies” (Jun. 23, 2011). For further insight from EisnerAmper professionals, see “Legal and Accounting Considerations in Connection With Hedge Fund General Redemption Provisions, Lock-Up Periods, Side Pockets, Gates, Redemption Suspensions and Special Purpose Vehicles” (Nov. 5, 2010).

Effects of Expanding SEC Investment Adviser Examinations

In its quest to increase scrutiny of hedge fund managers and investment advisers, the SEC is looking to review a larger percentage of investment advisers, examining a broader universe of topics and gathering ever-larger quantities of data. At a recent program at the Practising Law Institute’s 2016 Investment Management Institute, panelists offered substantive information about the SEC’s examination processes and practices, including data analysis and the possibility that it will rely on third-party examiners. Panelists also addressed SEC concerns with fund liquidity and chief compliance officer liability. Moderated by Paul F. Roye, a former Director of the SEC Division of Investment Management and currently a director of Capital Research and Management Company, the panel featured Joseph P. DiMaria, Assistant Regional Director in the SEC New York Regional Office’s investment adviser / investment company examination program; Maria Gattuso, a principal at Deloitte & Touche; and Philip L. Kirstein, independent compliance officer and senior officer at AllianceBernstein. This article summarizes the key insights promulgated by the panel. For more on SEC investigations, see “Recommended Actions for Hedge Fund Managers in Light of SEC Enforcement Trends” (Oct. 22, 2015); and our two-part series on “The SEC’s Broken Windows Approach”: “Conflicts of Interest and Expense Allocation Concerns” (Sep. 24, 2015); and “Compliance Resources, CCO Liability and Technology Concerns” (Oct. 1, 2015).

Deutsche Bank Alternative Investment Survey Explores Fund Fees, Early Stage Investing and AIFMD (Part Two of Two)

In its 14th annual comprehensive Alternative Investment Survey, Deutsche Bank Global Prime Finance (DB) compiled information from 504 global hedge fund allocators that manage over $2 trillion in aggregate hedge fund assets – more than two-thirds of estimated total hedge fund assets. DB recently released the results of that survey. This second article of our two-part coverage examines portions of the survey dealing with hedge fund fees, early stage investing and the Alternative Investment Fund Managers Directive. The first article covered survey methodology, potential asset flows, investor allocation plans and portfolio construction. For coverage of similar sections of DB’s 2015 survey, see “Deutsche Bank Alternative Investment Survey Explores Fee and Liquidity Trends, the Landscape for Investment Intermediaries and Early Stage Investment Terms (Part Two of Two)” (Jun. 4, 2015). For discussion of other surveys of the alternative investment space, see “Credit Suisse Survey Evaluates Investor Appetite for Alternative Investment Vehicles and Strategy Preferences” (Aug. 27, 2015); and our series on Citi Business Advisory Services’ sixth annual asset management Industry Evolution Report: Part One (Jul. 30, 2015); Part Two (Aug. 6, 2015); and Part Three (Aug. 13, 2015).

European Central Bank Official Regards Hedge Fund Leverage As Risk to Financial System

In a keynote speech at Chatham House’s European Capital Markets conference in London on March 21, 2016, Vítor Constâncio, Vice-President of the European Central Bank (ECB), discussed the relevance of the Capital Markets Union (CMU) for the ECB. While Constâncio explained the ways the CMU could help enhance the economic and welfare effects of the euro area, he also enumerated risks that the CMU could pose to overall financial stability, requiring the development of a stronger macroprudential framework. Of particular relevance to hedge fund managers, Constâncio argued that the use of leverage by alternative investment funds poses a systemic risk and needs to be better controlled as part of this macroprudential framework. This article summarizes Constâncio remarks. For more on the CMU, see “European Commissioner Emphasizes Need for Proportionate Regulation to Promote the CMU” (Mar. 17, 2016); and “E.U. Action Plan to Unify Capital Markets May Affect Hedge Fund Managers” (Oct. 8, 2015).

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