Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
FINANCIAL services professionals will have a say in regulatory changes designed to make Australia more attractive to foreign funds managers under proposals outlined today.
The Australian Financial Centre Forum found today that although Australia’s funds management industry is one of the most sophisticated in the world because of the superannuation system, uncertainty over tax treatment and outmoded tax rules meant that there were almost no overseas funds run out of Australia.
The Securities and Exchange Commission is shaking up its enforcement division, establishing five priority areas, including one pointed directly at hedge funds and private equity firms.
The agency, and in particular its enforcement arm, have taken a beating in the press and on Capitol Hill for its failure to detect Bernard Madoff’s $65 billion Ponzi scheme and other alleged frauds. The SEC has responded with what it calls the most significant reorganization of the enforcement division since it was created nearly 40 years ago
Jan. 14 (Bloomberg) — The California Public Employees’ Retirement System, the largest U.S. public pension, said private investment firms paid at least $125 million to placement agents for help winning contracts to manage the fund’s money.
The pension fund today released more than 5,000 pages of documents it sought from fund managers detailing when they hired middlemen and how much they paid. To the best of the pension’s knowledge, the top-earning agent was a firm run by former board member Alfred Villalobos, who received $58.9 million in the last decade, as Calpers disclosed last year.
ZURICH (Reuters) – The fast-growing BRIC group of economies will be back in favor in 2010 among emerging markets-focused hedge fund managers, who may shun European countries slammed by recession, an industry expert said.
While strong growth is expected in Brazil, Russia, India and China, the European Commission expects the fiscal position of so-called PIIGS — Portugal, Ireland, Italy, Greece and Spain — to worsen even further in 2010.
Michel Barnier, the European Commissioner designate for the Internal Market and Services, has said he wants to come to London soon to ask hedge fund and private equity managers about changing the EU’s controversial proposed Alternative Investment Fund Managers Directive.
In a two-page letter responding to Syad Kamal, Member of the European Parliament for London, Barnier said he recognised there were issues about the proposed regulations affecting hedge funds and private equity.
Telegraph – Bill Browder knows exactly the “darkest day” of his life. It was Tuesday November 17, the day he found out that his colleague Sergei Magnitsky, a Russian lawyer, had died in a squalid Moscow prison awaiting trial. Although the two had only met on a handful of occasions, Browder says the news “was like a knife through the heart”.
Since his death, Magnitsky has become a martyr for anti-corruption crusaders in Russia. It’s a cause long-championed by Browder, founder of hedge fund Hermitage Capital Management and once the largest foreign portfolio investor in the country.
New York (HedgeCo.net) – John Henry, perhaps best known as principal owner of the Boston Red Sox, has announced the firings of roughly one quarter of the staff at his Boca Raton, FL based investment company, John W. Henry & Co. According to the Boston Globe, the layoffs included a cross-section of workers because the firm, as Henry stated, “has been overstaffed for some time relative to its size.”
The firm, which manages or co-manages seven different futures or commodities-themed hedge funds, manages $188 million, not to mention an additional $200 million it co-manages with other firms. The investment manager, whose clients include the institutional likes of retirement plans, insurers, and the high net worth, has seen its assets under management fall from as high as $2.5 billion in 2004.
Henry’s funds, which boast relatively loose liquidity terms, suffered heavy redemptions dating back to 2008. Specifically, last fall many institutional investors were unable to withdraw their funds from less-liquid private equity and hedge fund investments which featured lengthy lockup provisions. As a result, many took advantage of their relatively easy access to Henry’s funds, withdrawing considerable sums and dramatically shrinking the firm’s assets under management.
In 2008, Henry’s firm performed impressively, with its larger funds posting returns from 40 to 90 percent. In 2009, however, those same funds were down between 6 and 21 percent between Jan. 1 and Oct. 31.
Dave Reynolds
Contributing Writer, HedgeCo.net
news@hedgeco.net
Bloomberg – Bear Stearns Cos. hedge fund manager Ralph Cioffi told investors in April 2007 that there had been a “couple of million” dollars in redemptions, days after being told an investor asked to withdraw $57 million.
Evan Kerr, a former managing director of Bear hedge fund sales, testified in federal court that he told Cioffi on April 18, 2007, that his client, Concord Management LLC, a Tarrytown, New York, hedge fund adviser, intended to pull its investment in Cioffi’s funds, after meeting that day with Cioffi and fellow fund manager, Matthew Tannin.
Boston.com – Hedge fund managers – a secretive, lightly regulated group portrayed by some as villains in last year’s financial meltdown – appear to have a new degree of clout on Capitol Hill in shaping legislation that will determine how they will be regulated.
To gain that clout, industry leaders are using a congressman-turned-lobbyist, a major increase in campaign donations, and a strategy that relies heavily on advancing their own reform ideas, making them active players in the legislative process and perhaps staving off more rigorous regulation measures.
New York (HedgeCo.Net) – Hedge fund pioneers Ellen C. Schubert and Ray J. Iler have joined the hedge fund team of Deloitte LLP’s Asset Management Services practice.
Schubert joined Deloitte in the newly-created role of Chief Advisor to the Asset Management Services practice and is based in New York. Prior to joining Deloitte, Schubert was a managing director and global head of the Fixed Income Hedge Fund Business for UBS Investment Bank from 2006 until 2008.
Iler rejoined Deloitte as the Northwest Pacific hedge fund leader and is based in San Francisco. From 2001 to 2006, he founded the tax practice and served as Audit Partner for Deloitte’s Grand Cayman practice.
The new hires are the latest in a series of strategic growth initiatives executed over the last 18 months by Cary Stier, Deloitte’s U.S. Head of Asset Management Services.
“Challenging times call for new ideas. The breadth of our practice offers us the perspective vital to designing new solutions that help clients prepare for the unforeseen. There has been too much surprise in the market, a trend that cannot continue,” Stier added.
Ten current Deloitte partners have been newly-dedicated to Deloitte’s hedge fund team, joining the global bench of talent in accounting and tax, valuation, anti-fraud, governance and oversight, regulatory and compliance, risk management, technology and operations, structuring, and third party administrator/prime brokerage relationships.
Alex Akesson
Editor for HedgeCo.net alex@hedgeco.net HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Trademarks are invaluable assets. They are the primary means through which most companies identify themselves to the public, and the primary means through which the public identifies and distinguishes one company from another. Yet many hedge fund managers do not register their trademarks with either the United States Patent and Trademark Office or the trademark offices of other countries in which they conduct business. By failing to register their trademark rights, hedge fund managers are potentially losing out on some important benefits they would otherwise enjoy and in some cases may even be risking the loss of their trademark rights. Since trademark applications can be filed both before and after a hedge fund has launched, even managers of active funds who have not yet registered their trademarks should give serious consideration to filing a trademark application. Below we briefly discuss what a trademark is and the factors fund managers should consider in deciding whether or not to register their trademarks.
What is a trademark and why are trademarks important to hedge fund managers?
A trademark is generally a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies the source of a product or service and distinguishes the source of that product or service from the source of other products or services. In the case of hedge funds, the fund’s trademark is frequently the same as or comprises a portion of the fund’s name. For example, in the case of a fund where the investment manager is ABC Capital Management, LLC, the general partner is ABC Capital, LLC, and the fund is ABC Partners, LP, the mark ABC may be considered the fund’s trademark, since it is by this portion of the fund’s name that the fund is recognized by the public.
Establishing valid trademark rights is important because owning valid trademark rights entitles the trademark owner to prevent third parties from using the same or a confusingly similar mark for the same or related goods or services to those of the trademark owner. This can prevent the public from being confused between two or more funds with similar names or marks. Although hedge funds are generally precluded from advertising, and relationships with investors are developed primarily through personal connections, confusion can and frequently does arise through external sources. As one court noted in finding trademark infringement where both parties were in the investment business: “High-level investment business is commonly conducted based on trust and personal relationships among individuals. If any investor reads about a [Defendant] investment … and mistakes that transaction for a [Plaintiff] investment of which it was not aware, it may well feel ‘cut out’ of a potential lucrative deal. … [I]ts business relations with [Plaintiff] could be soured.” Morningside Group Ltd. v. Morningside Capital Group, L.L.C., 182 F.3d 133, 140 (2d Cir. 1999).
1. Trademark registration in the United States
A. In the United States, trademark rights are generally acquired through the use of a mark in commerce. This means that so long as a mark is in use in the United States in compliance with the technical requirements of United States trademark law, registration is not necessary to establish trademark rights. Unregistered trademark rights, however, are limited to the geographic areas in which the mark is actually in use and a zone of natural expansion. As a result, to the extent that a fund manager is only operating in certain states, it would be difficult for it to prevent another fund from using the same or a similar mark in other states. This could present difficulties as the manager’s activities expand into additional states. In contrast, a fund manager whose mark is federally registered on the Principal Register (which is the register on which registration of most hedge fund trademarks is sought) enjoys a presumption that it is entitled to the exclusive right to use its mark throughout the entire United States.
B. If a manager is only preparing to conduct business, and has not yet commenced using its mark in compliance with the requirements of United States trademark law, filing a federal trademark application gives the manager a way of reserving rights in the mark. In the absence of such a filing, a third party fund may be able to adopt the same or a confusingly similar mark.
C. Federal registration on the Principal Register provides constructive notice of ownership of the mark eliminating claims of good faith adoption and use of the mark by third parties. Because hedge funds are generally precluded from advertising, third party funds may not be aware of them when choosing a new name. Registration of the fund’s trademark increases its visibility, however, thereby increasing the likelihood that a third party fund will discover it when conducting a clearance search prior to choosing a new name. As a result, third party funds will be less likely to choose the same or a similar name for their businesses.
D. Other legal advantages to registration on the Principal Register include the following:
(1) presumptions that the registrant owns the mark and that it is valid; in one notable case, among the factors a court considered in finding that use of a trademark by a commercial lending broker did not infringe the identical mark used by a hedge fund was the hedge fund’s failure to register its mark (Omicron Capital, LLC v. Omicron Capital, LLC, 433 F. Supp. 2d 382 (S.D.N.Y. 2006));
(2) the U.S. registration can be a basis for obtaining registration in certain foreign countries;
(3) the registration entitles the owner to file actions concerning the mark in federal court;
(4) the registration entitles the owner to enhanced damages if successful in an infringement action; and
(5) under certain circumstances, the registration can become incontestable, which means that it can only be challenged on certain narrow grounds prescribed by statute.
Further, trademark registration is perceived from a marketing perspective by many as a means through which a manager can establish its brand and institutionalize its image.
2. Trademark registration in foreign countries
In contrast to the United States, trademark rights in most foreign countries are acquired through registration, not use. Therefore, fund managers who have not registered their trademark rights in those countries may not be able to preclude third parties from adopting the same or a similar mark for the same or related services.
3. Caveats
Although registering trademark rights can confer significant benefits, there are certain limitations which should be borne in mind when deciding whether or not to file a trademark application. Significantly, in many countries including the United States, filing a trademark application and obtaining a trademark registration do not eliminate the prior trademark rights of third parties. Therefore, under certain conditions, third parties with relevant prior trademark rights may object to a later-filed trademark application or a trademark registration, and the trademark offices of various countries may raise objections to an application that are based on prior third party applications or registrations that are enforceable in that country. Responding to these objections can be time-consuming and costly and may not be successful. Careful consideration should therefore be given to conducting a trademark search prior to filing an application in order to assess any third party risks.
4. Application process
Preparing a trademark application is usually fairly straightforward and involves providing the trademark office with basic information about the applicant and the mark. After filing, the trademark offices of most countries (including the United States) will examine the application and notify the applicant (or the applicant’s attorney) of any objections. Among the objections that may be raised by the trademark office is that there is a third party with an application or registration for the same or a confusingly similar mark. In addition, the trademark offices of most countries provide third parties with the opportunity to object to an application. Therefore, although a trademark application can be filed at any time, it is generally advisable to file an application as early as possible in order to reduce the risk of objections based on third party marks. Conducting a trademark search prior to filing an application can also aid in identifying any third party risks.
Assuming no objections are raised to a trademark application, or that any objections raised are minimal, obtaining a trademark registration is generally a relatively inexpensive process. The process can become much more expensive, however, if significant objections are raised.
Trademark registration can provide fund managers with valuable benefits. If you have any questions about trademark registration, please contact Beth Alter at Seward & Kissel’s Intellectual Property Group at (212) 574-1427 or alter@sewkis.com.
Seward & Kissel’s Intellectual Property Group counsels clients in connection with their trademarks, copyrights, technology transactions and related matters throughout the world.
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Tubefilter news – Do you know what a Hedge Fund is? I don’t. And neither do the boys at the Claude S. Dutchy, LLC hedge fund. But, damnit, they’re determined to make it rich enough to race Lamborghinis, orbit earth in space, swim with their pet mako sharks and have orgies! Or so, Claude says in episode two of this uneven, yet satisfying web series, Hedge Fund.
Creator, writer and director Chris Murray conceived the idea a couple of years ago, ‘while the economy was strong and money was flowing’ about four slackers without a clue who decide for no good reason to start a hedge fund. The boys operate out of their one bedroom apartment in Manhattan concocting angles to success that include uber-skinny jeans, croissandwiches and one bogus ten million dollar promissory note.
