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Because of the recent market turmoil, many hedge-fund investors have questions regarding what regulations are applicable to hedge funds, and how to withdraw their money from their hedge-fund investments if they want out. Indeed, hedge funds often present many different barriers to withdrawal, and there are essentially no regulatory prohibitions on these barriers.
Perhaps the best way to understand the regulations that apply to hedge funds is to compare them with mutual funds. Mutual funds are investment companies that are required by law to register with the U.S. Securities and Exchange Commission (SEC) and, therefore, are subject to stringent regulatory oversight. Virtually every aspect of a mutual fund’s structure and operation is subject to regulation under four federal laws, including the Securities Act of 1933, the Investment Company Act of 1940, the Securities Exchange Act of 1934 and the Investment Advisers Act. The Investment Company Act regulates the structure and operation of mutual funds and forces funds to safeguard their portfolio securities.
West Palm Beach (HedgeCo.net) - Sidley Austin LLP has added six new members to its Executive Committee, the Committee that exercises general authority over the affairs of the firm, and two new members to its Management Committee, the Committee which governs the firm’s day-to-day activities.
William D. Kerr of Chicago joins as global coordinator of the firm’s Investment Funds, Advisers and Derivatives practice and a partner since 1991. He represents clients in securities and derivatives-related corporate and regulatory matters, including the organization and operation of hedge funds, commodity pools, real estate funds and private equity funds, organization and operation of investment advisers, commodity pool operators and commodity trading advisors, structured products, and derivatives documentation and regulation.
Michael J. Schmidtberger of New York has been a partner since 1993 and a global coordinator of the firm’s Investment Funds, Advisers and Derivatives practice, focuses his practice on securities and futures-related funds and corporate transactions, including related regulatory matters.
Schmidtberger regularly advises and represents clients in domestic and international offerings of hedge funds, fund of funds, public and private commodity pools and structured derivative and principal-protected transactions. Mr. Schmidtberger has also counseled clients in numerous fund restructurings and work-out situations. He is also a member of the firm’s Executive Committee and a member of the Committee on Retention and Promotion of Women.
“All of these partners are extremely talented lawyers and have contributed significantly to the growth and success of the firm,” said Thomas A. Cole, Chair of the Executive Committee.
Also hired are, Edward G. Poplawski, Raymond A. Bonner, Constance Choy and Peter D. Keisler, bringing the current count to 49.
“We are delighted to welcome these lawyers to governance roles so they may continue to serve as leaders of the firm,” said Charles W. Douglas, Chair of the Management Committee.
Sidley Austin LLP is one of the world’s largest full-service law firms, with more than 1800 lawyers practicing in 16 U.S. and international cities, including Beijing, Brussels, Frankfurt, Geneva, Hong Kong, London, Shanghai, Singapore, Sydney and Tokyo.
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West Palm Beach (HedgeCo.Net)- The SEC has clarified its position on the "Cash Solicitation Rule" saying that a registered investment adviser may compensate a person for soliciting investors for, or referring investors to his or her investment fund.
Usually, under the rule, it is illegal for an investment adviser to pay a cash fee, directly or indirectly, as the "Cash Solicitation Rule" only applies to solicitations of “clients.”
But the SEC has taken the position that solicitations of investors for investment funds should not fall ito that category. The determination of whether the cash payment is being made solely to compensate that person for soliciting or referring investors will depend on the facts and circumstances of each particular case.
The SEC also warned that "Despite the additional guidance provided by the interpretative letter, investment advisers will need to continue to be mindful of potential traps for the unwary when entering into solicitation agreements."
Boston Globe- The Securities and Exchange Commission yesterday said that it and other regulators would begin examining rumor-spreading intended to manipulate securities prices.
The timing of the announcement, made before the markets opened in Asia, was meant to warn broker-dealers, hedge funds, and investment advisers to quell any spreading of rumors before trading started today.
The SEC has been engaged in an internal debate over what kind of investigation to mount with respect to rumors. The turbulence in the markets last week, with rumors adding to concerns about fundamentals affecting commercial banks, investment banks, and the government-chartered enterprises Fannie Mae and Freddie Mac, sped the decision to begin the examination and make it public.
"Traders know there is false information in the market. They need to think twice if they are going to pass it on," said Lori Richards, an SEC official.