LexisNexis® Legal Newsroom
Massachusetts and Expert Network Services

At least one of the hedge funds being investigated for its use of expert networks in based in Massachusetts. In an unusual instance of the state regulators acting before Securities and Exchange Commission, the Massachusetts securities regulators are proposing a new regulation to address the use of...

Limiting Redemptions by Limited Partners

Hedge funds usually give their limited partners an ability to redeem their interests at certain periods during the investment period. That ability is often subject to a "gates provision" that limits a quick outflow of capital. The provision is general there to avoid a liquidity crisis in...

Hedge Fund Boards of Directors Play Vital Role

The role of directors on offshore hedge funds has often been, at best, a limited oversight role, with perfunctory annual meetings and limited interchange with the fund itself during the year.* This has been changing - slowly- as compliance moves to the top of the list of concerns for investors and...

For Hedge Fund Investors in the Know, New Regulations May Provide Enhanced Transparency

Securities regulations have many goals (prevention of misdeeds, market stability, investor protection), however, for those who can navigate the system, new hedge fund regulations will have the effect of increasing transparency for hedge fund investors. While recent moves appear to be primarily aimed...

Perils of Side Letters for Hedge Fund Managers and Investors

Most investors contemplating investing in a hedge fund believe they are presented with a set of fixed terms for their investment. These terms are outlined in the private offering memorandum and appear to apply across the board to all investors. However, careful readers of the offering memo as well...

SEC Stepping Up Fund Enforcement Actions

Some interesting news today out of the SEC about new enforcement actions by the SEC against hedge funds - specifically, against three separate advisory firms and six individuals for alleged violations initially uncovered through the results of SEC proprietary data analysis. That final point may...

Insider Trading at Hedge Funds: A Risk Area that is Difficult to Address

Insider trading is an area of risk that hedge fund management finds very difficult to identify and prevent. While the problem has become increasingly prevalent, the tools to be able to assist hedge fund managers have not expanded proportionately. A break-down in personal trust in the industry as...

Is Apple a Hedge Fund?

I don't own any Apple stock, but their announcement about what they're planning to do with their big stockpile of cash caught my attention. Not because I'm going to rush out and buy the stock, but because of Dodd-Frank. My analysis of when fund managers need to register with the Securities...

State Net Capitol Journal – April 9, 2012

Budget & Taxes RISKY PENSION INVESTMENTS NOT PAYING OFF: Hoping to boost their investment returns and shrink looming deficits, public pension systems across the nation have been turning to riskier investments, such as private equity and hedge funds. But their returns haven't been rising nearly...

State Net Capitol Journal – April 9, 2012

Budget & Taxes RISKY PENSION INVESTMENTS NOT PAYING OFF: Hoping to boost their investment returns and shrink looming deficits, public pension systems across the nation have been turning to riskier investments, such as private equity and hedge funds. But their returns haven't been rising nearly...

California Man Receives 65-Month Sentence for $3.3 Million Ponzi Scheme

A California man has been sentenced to serve 65 months in federal prison after pleading guilty to operating a Ponzi scheme that duped investors out of over $3 million. Krittibas Ray, 43, of Albany, California, was indicted in December 2011 on two counts of wire fraud and one count of money laundering...

Is Your Hedge Fund Style "Drifting"? Quick, Catch It!

Hedge fund style "drift" is said to occur when a hedge fund manager strays from their stated investment strategy. The term used to be an esoteric one, used only by professional hedge fund analysts. However, "drifting" is a problem that is lately coming into view more by regulators...

Portfolio Manager Charged Over Role In $276 Million Insider Trading Scheme

NEW YORK - (Mealey's) The U.S. attorney for the Southern District of New York, in conjunction with the Federal Bureau of Investigation, on Nov. 21 announced the unsealing of insider trading charges against a former portfolio manager for a division of a group of affiliated hedge funds for his role...

'Finding' Hedge Fund Investors Just Got A Bit More Difficult

The hedge fund world has always walked a fine line when it comes to attracting new investors. And nowhere has this line been thinner than the one between "finders" and "solicitors" - the parties who act as the middlemen in the investor location process. According to SEC rules...

Hedge Funds And Money Laundering

There are indications from Washington that hedge funds, long exempt from anti-money laundering reporting rules, may soon be brought into the fold under new rules proposed by the Treasury Department's Financial Crimes Enforcement Network (FinCEN). Rule-making issues aside, hedge fund managers...

Compliance Technology Now a Necessity for Hedge Funds

Once viewed as a luxury reserved for only the largest hedge funds, compliance technology has entered the mainstream. The complexity of reporting obligations, combined with the expanded number of hedge fund investment advisers that are now registered with the SEC and CFTC, are the drivers of the increased...

Rhode Island Bets Big on Hedge Funds

Rhode Island has put 14 percent, or $1 billion, of its $7.5 billion in pension fund assets into a form of investment generally considered the exclusive province of sophisticated money managers and wealthy investors: hedge funds. The state is now short selling, leveraging and spread trading in Asian futures...

Private Equity Fund Investing in Pot

A pair of experienced investment bankers are moving into the marijuana business. They've set up a private equity firm that will buy up businesses in the medical marijuana industry and the nascent market for legalized recreational pot. Brendan Kennedy, one of the cofounders of Privateer Holdings,...

Government Shutdown Impact on Hedge Funds

The impact of the October 1 shutdown of the federal government on hedge funds is now playing out in slow motion. While the SEC remains open due to its ability to self-fund for a few weeks, its sister agency, the CFTC has shut down. These are the agencies that provide oversight to the securities and commodities...

Hedge Funds Wrestle with Employee Personal Account Trading Conflicts

Trading ahead of client accounts. Insider trading. Breach of fiduciary duty. These were just some of the concerns that the SEC had when it adopted the requirement for investment advisers to establish policies to monitor employee personal trading in 2004. While seemingly straightforward, in the decade...

Cybersecurity of Hedge Fund Data

The cybersecurity of hedge fund data is now a front-burner issue for many firms. In the wake of recent NSA leaks, privacy breaches and hacking scandals, both the regulators and the firms themselves have moved this up in the list of concerns. Issues relate to both the integrity of internal hedge fund...

Hedge Funds Must Ramp Up Infrastructure to Accommodate Liquid Alts

Pressures have been mounting on hedge fund managers to hedge their own businesses and diversify away from the hedge fund model itself. Lackluster performance, difficult markets, fees that are perceived as too high, scandals and conflicts of interests are just a few of the factors that are leading managers...

Transparency Issues at Hedge Funds Continue

How much information should be provided to investors about the fund they have invested in? The answer to this question has evolved over time. In the past, limited information was provided on the theory that the manager always knew best and the trading strategy should remain as shrouded as possible in...

First Hedge Fund Filing Moves to PTAB Decision

First Hedge Fund IPR Ready for PTAB Institution Decision Earlier this week, Acorda Therapeutics filed its response to the first of the now notorious hedge fund IPR filings in (IPR2015-00720). In its response ( here ), Acorda points out that unnamed investors are directly funding the filing, yet remain...

Diversity Matters for Hedge Funds

In June, a final inter-agency policy statement establishing joint standards for assessing the diversity and inclusion policies and practices of regulated financial entities was published by the SEC and five other financial regulators. The issuance of this policy statement was a requirement of the Dodd...