Hedge Funds in the Current Environment

Synopsis

It has been a time of unprecedented change for hedge funds. After explosive growth, the hedge fund industry has contracted substantially due to the financial crisis. In addition, over the past year there have been fund liquidations, lawsuits by investors, and numerous SEC and other enforcement actions and investigations.New regulation is on its way, and the industry is clearly in transition.

This course provides an overview of the current and proposed rules related to operating a hedge fund. The presenters provide an in-depth discussion on how to avoid problems in the enforcement environment and provide best practices for protecting hedge fund advisers from liability. The registration process, requirements applicable to registered advisers, and operating issues involving hedge funds are also examined.

Finally, top practitioners and regulators discuss their views on hedge fund issues. Although this program is intended for professionals in the hedge fund industry as well as experienced lawyers who practice in hedge funds, lawyers who are interested in developing hedge funds expertise will also benefit.



Outline
I. Major Hedge Fund Issues
    A. The Big Picture 
    B. Hedge Fund Inspections
        1. Dodd-Frank and the National Exam Program
        2. New Reporting Obligations
        3. Obligations for Newly Registered Advisers
        4. Ten Takeaways for Registered Advisers
        5. Who Pays and Interpretation of Filings
    C. Insider Trading
        1. The Current View
        2. Market Surveillance
        3. What Actually Is Insider Trading?
        4. Trading on Material Non-Public Information
        5. Duty and Responsibility
    D. JOBS Act
        1. What's It All About?
        2. Cybersecurity
    E. Structuring a Hedge Fund
        1. Solving for the Investment Company Act Considerations
        2. More Considerations When Setting Up a Hedge Fund
        3. Common Fund Structures
    F. Registering With the SEC
        1. Overview of the Process
        2. ADV Preparation Tips
        3. Preparing Your Compliance Programs
    G. Compliance Programs In Depth
        1. Tailoring Your Compliance Program
        2. Hot Issues
        3. Expense Allocation: Beware     
    H. CFTC/NFA Registration Rules
        1. What's Happening With the CFTC
        2. The 4.13(a)(3) Exemption
        3. Effect of the New Rules
    I. The Effects of the Changes from a Trading Perspective
        1. The Major Events
        2. The Regulator's Approach
        3. The Problem With Possible Overregulation
        4. Going Back to Silos
        5. Creditworthiness of Funds
        6. Panel and Audience Discussion
    J. M&A and Employment Arrangements
        1. Trends in Hedge Funds
        2. Motivations of the Seller
        3. It's All About the Talent
        4. The Transaction
        5. Corporate Governance Issues
        6. Employment Agreements, Due Diligence and More
    K. Registered Fund Products
        1. Major Trends
        2. Registered Fund vs. Private Fund
        3. Confidentiality
        4. The Rules
        5. The Board of Directors
        6. Compliance Procedures
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The Association of the Bar of the City of New York

The years following the Civil War were tumultuous ones for New York City, offering many opportunities to the dishonest. Unsavory politicians and errant members of the bench and bar were among those who took advantage of those troubled times. In December 1869, a letter was circulated among some of the city’s lawyers addressing those improprieties. It called for the creation of a new bar association to “sustain the profession in its proper position in the community, and thereby enable it ... to promote the interests of the public ....” More than 200 lawyers responded by signing a declaration of organization and in 1870 The Association of the Bar of the City of New York was born. The young organization quickly made its presence felt. Among its first activities was a campaign to defeat corrupt politicians and judges at the polls and to establish standards of conduct for those in the legal profession.

The association continues to work at political, legal and social reform, and maintaining high ethical standards for the legal profession. The association also continues to implement innovative means by which the disadvantaged may be helped. Much of this work is accomplished through the Association's more than 160 committees, each charged to consider a specific area of law or the profession.

The association has grown to more than 23,000 members. To serve them, the association strives to move ahead in many areas. The library is the largest member-funded law library in the country, and provides members with a “gateway” to online services, including free use of LexisNexis and WestLaw, while continuing to provide more traditional library services. The Small Law Firm Center, Career Management Program and other benefits are constantly evolving to serve members’ needs. More than 150 continuing legal education programs are presented annually.

The public good remains one of the association’s highest priorities. The Legal Referral Service, jointly sponsored by the association and the New York County Lawyers’ Association, provides an array of services directly aimed at serving the needs of the public. The City Bar Justice Center identifies the most pressing legal concerns of New York’s neediest and uses novel approaches to address them, often involving community participation.





Speakers / Authors:

Photo of Nora M. Jordan

Nora M. Jordan
Davis Polk & Wardwell LLP

As head of Davis Polk’s Investment Management Group, Ms. Jordan advises clients on collective investment vehicles, including hedge funds, mutual funds, closed-end funds and private equity funds. She acts as counsel to the adviser, the fund or the independent directors, depending on the client. Many of her matters involve advising clients concerning compliance with the Investment Company Act and Investment Advisers Act.

Ms. Jordan also provides exemptive advice concerning the Investment Company Act for industrial holding companies and non-U.S. trading companies, banks, insurance companies and other financial institutions. She has also worked on a number of acquisitions, reorganizations and structurings of asset managers. Ms. Jordan frequently provides advice to financial institutions that have affiliated asset managers and broker-dealers. Principal and agency transactions between asset manager clients and broker-dealers are highly regulated, and she provides advice on these regulations as well as other regulations affecting private funds, advisers and mutual funds.

Ms. Jordan is admitted to the Bar in the State of New York. She received her J.D., with honors, from Duke University School of Law in 1983 and her B.A., cum laude, from the University of Notre Dame in 1980.

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Norman B. Champ III
U.S. Securities and Exchange Commission

Norman Champ III is the Director of Investment Management of the U.S. Securities and Exchange Commission. Before joining the staff of the Commission in 2010, Mr. Champ was Executive Vice President and General Counsel of Chilton Investment Company, an investment adviser to long/short equity hedge funds and managed accounts.

He has been a panelist on examination topics at programs by the Commission, the Practicing Law Institute, the Saudi Central Bank, the New York City Bar Association and the International Bar Association. Mr. Champ has participated in the Commission’s Technical Assistance program in Saudi Arabia and Abu Dhabi. From 2006 to 2009 Mr. Champ was a member of the Board of Directors of the Managed Funds Association, an alternative investment industry trade group, and was the Chair of its Investor Protection Task Force. Mr. Champ is a Lecturer on Law at Harvard Law School where he teaches Investment Management Law. Prior to joining Chilton in 1999, Mr. Champ was with the law firm of Davis Polk & Wardwell. From 1990 to 1992, Mr. Champ clerked for the Honorable Charles S. Haight, Jr. of the U.S. District Court for the Southern District of New York.

Mr. Champ has an A.B. in History from Princeton University and a J.D. from Harvard Law School. He was a Fulbright Scholar at King’s College London where he received his M.A. in War Studies.

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Todd Greenbarg
Avenue Capital Group

Mr. Greenbarg is a Senior Managing Director at Avenue Capital Group. He is responsible for legal matters across the firm’s strategies. Mr. Greenbarg focuses on all areas affecting the firm’s management companies and funds, including structuring new investment products, drafting all constituent documents for the funds and general contract work.

Prior to joining Avenue in 2003, Mr. Greenbarg was an Associate in the Investment Funds practice at Paul, Weiss, Rifkind, Wharton & Garrison LLP, where he specialized in the formation, structuring and development of private equity funds, institutional funds, hedge funds and other private investment partnerships. During his time at Paul Weiss, Mr. Greenbarg was responsible for the fund formation work for the Avenue funds.

Mr. Greenbarg received a B.S. in Psychology from the University of Pennsylvania where he graduated Phi Beta Kappa, summa cum laude, with Honors in 1997, and a J.D. from New York University School of Law in 2000.

Photo of N. Adele Hogan

N. Adele Hogan
Sheppard Mullin Richter & Hampton LLP

Adele Hogan is a member of the Corporate practice group in Sheppard Mullin Richter & Hampton's New York office.In the securities area, Ms. Hogan has worked for underwriters and issuers in a wide array of industries on offerings of diverse types of securities, medium-term note programs, 144A offerings, debt tenders, and consent solicitations. She regularly advises on SEC reporting, disclosure and corporate governance issues. 

Her work in the restructuring area involves diverse industries, including airlines, automotive, energy and utilities, financial institutions, gaming, hotels and leisure, real estate, and retail. In the M&A area, she has led public company tender offers, acquisitions and divestitures, going-private transactions, spin-offs and private equity deals. Throughout her career, Ms. Hogan has worked on more than 200 deals totaling over $250 billion. 

Ms. Hogan is admitted to practice in New York and before the U.S. Supreme Court. She earned her J.D. from Cornell University in 1985, and a B.A, also from Cornell University, in 1982.

Photo of Leor Landa

Leor Landa
Davis Polk & Wardwell LLP

Mr. Landa is a partner in Davis Polk’s Investment Management/Private Funds Group. He advises a wide range of clients on the development, formation, marketing and operation of private investment funds, including private equity funds, hedge funds, hybrid funds, real estate funds, secondary funds, funds of funds, fund and advisory platforms and asset allocation products. He also regularly provides regulatory and compliance advice to his private fund clients.

He advises fund managers on compensation and profit sharing arrangements. He also advises on structuring and executing private equity, structured equity and public market transactions as well as acquisitions of investment advisers.Mr. Landa also represents several large institutional investors that invest in private funds.

Representative private fund clients have included Credit Suisse Strategic Partners, Coatue Capital, TPG-Axon, DLJ Merchant Banking, Avenue Capital, Perella Weinberg Partners, Capricorn Investment Group, Royal Capital, PointState Capital, Scopus Asset Management, Citadel, Fore Research, Morgan Stanley and J.P. Morgan.

Mr. Landa is admitted to practice in New York State. He received his J.D. from Columbia Law School in 1997 and his B.A. from Johns Hopkins University in 1994.

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Michael Huber
Goldman Sachs

Michael Huber is a member of the Legal Department practice groups for Prime Brokerage, Clearing and Futures at Goldman Sachs. He joined Goldman Sachs in 2005 as a vice president and was named managing director in 2011. Prior to joining the firm, he was an associate at Davis Polk and Wardwell, where he advised financial institutions and hedge funds on various financial products, broker-dealer regulation and cross-border collateral issues. In 2001, he was seconded to Deutsche Bank’s legal department to cover prime brokerage.

Mr. Huber serves as chairman of the SIFMA Prime Brokerage and Securities Lending Legal and Compliance Subcommittee. He was an adjunct professor at the L.L.M. program in Financial Services Law at New York Law School in 2010.

Mr. Huber earned an L.L.M. from the New York University School of Law in 2000 and graduated from the University of Bern School of Law, Switzerland, in 1997. He is admitted to the bars of New York and Bern, Switzerland.

Photo of Jonathan Mayers

Jonathan Mayers
Renaissance Technologies LLC

Jonathan Mayers is senior counsel at Renaissance Technologies LLC. He joined the firm in 2007. Mr. Mayers’ practice areas include prime brokerage, derivates, structured products and fund related matters. He was an associate at Davis Polk and Wardwell where he practiced in the synthetic equities and banking groups. He then worked as in-house counsel for both Deutsche Bank and Barclays where he focused on broker-dealer regulation, prime brokerage, execution and clearing.

Mr.Mayers received a B.Bus.Sci. in 1994 and L.L.B. in 1996, both from the University of Cape Town. He received an L.L.M. in 2000 and an eL.L.M. (Taxation) in 2011 from New York University. He is admitted to the bars of New York and South Africa.

Photo of Thomas A. McKinney

Thomas A. McKinney
FrontPoint Partners LLC

Mr. McKinney is the Managing Director and General Counsel for FrontPoint Parnters. Prior to joining FrontPoint, LLP in January 2004, Mr. McKinney was associated with Davis Polk & Wardwell for eight years. Mr. McKinney is also the Director of FrontPoint Offshore Leveraged Multi-Strategy Fund Series A, Ltd. and FrontPoint Offshore Utility and Energy Fund Ltd. since January 2007.

Mr. McKinney is an active member of the Bar in the State of New York. Mr. McKinney received a B.A. with high distinction from the University of Kentucky and a J.D. from Columbia University, where he was a James Kent scholar.

Photo of A. Duer Meehan

A. Duer Meehan
PricewaterhouseCoopers

Mr. Meehan joined PricewaterhouseCoopers as a director in the Financial Services Regulatory Practice in 2010. Since joining PwC, Mr. Meehan has worked on projects with broker-dealers, asset managers, exchanges, and a rating agency. He has assisted firms with front to back regulatory reviews as well as addressing specific issues that include controls related to quantitative high-frequency trading, the prevention of insider trading, the implementation of new regulations, and the management of conflicts of interest.

Mr. Meehan is also a frequent speaker on regulatory issues at public conferences and a member of the Financial Services Regulatory Practice’s Dodd-Frank Financial Regulation Core Team. Prior to PwC, he was the Associate Director of the Office of Market Oversight in the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE). In this role, Mr. Meehan was responsible for supervising the Commission's oversight inspections of the self-regulatory organizations’ regulatory programs with respect to trading, including their surveillance, examination and disciplinary programs. His group was also responsible for examinations of brokerdealers' trading practices and operations, including alternative trading systems. In addition, he oversaw the Commission’s examinations of credit rating agencies and managed the transfer agent examination program as well as participating in examinations of investment advisers.

Before becoming an Associate Director, Mr. Meehan was an Assistant Director in OCIE’s broker-dealer group managing examinations addressing multiple issues including equity and debt securities trading and sales practices, supervision, internal controls and anti-money laundering.

Mr. Meehan has also served as an adjunct professor at Georgetown University Law Center teaching the regulation of securities trading. His experience prior to the SEC includes implementing trading systems at Bloomberg, L.P. and working as a specialist clerk on the floor of the NYSE.

Mr. Meehan received his B.A. from Hamilton College in 1989, and his J.D. from Willamette University College of Law in 1995.

Photo of Andrew N. Siegel

Andrew N. Siegel
Perella Weinberg Partners

Mr. Siegel is the General Counsel and Chief Compliance Officer for Perella Weinberg Partners. Prior to joining Perella Weinberg Partners, Mr. Siegel was General Counsel and Chief Compliance Officer of Stanfield Capital Partners LLC, an SEC-registered, alternative asset manager based in New York. Prior to joining Stanfield in 2004, Mr. Siegel served in the law division of Morgan Stanley where he advised on both investment banking and asset management matters. Ultimately, Mr. Siegel was the senior attorney responsible for advising Morgan Stanley Investment Management's alternative investment funds, including its private equity funds, venture capital funds, hedge funds and fund of funds. Previously in his career, Mr. Siegel was a Mergers and Acquisitions Associate at Shearman & Sterling.

Mr. Siegel received a B.A. in Political Science from Tufts University and a J.D. from Washington College of Law at American University.

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Details

Course Code : 773112

Release Date: 9/26/2012 12:00:00 AM
Recorded Date: 5/11/2012
Length: 3hr 28min
Format Type: Video

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