Hedge and Private Equity Funds

Tis the season for the regulators to announce their examination priorities.  No less than the SEC’s Office of Compliance Inspections and Examinations released its 2014 Examination Priorities for its National Examination Program (“NEP”).

In particular, the SEC identified several new issues for registered investment advisers, primarily for those RIAs, who are at least three years

Now that 2014 is here, it is a good idea to understand what the Enforcement Division might focus on this year.  In a recent article that appeared in the BNA, David Marder, a partner with Robins, Kaplan, Miller & Ciresi identified fifteen things to expect in the coming year. 

The fifteen things he noted to

Former shareholders may pursue narrowed claims against some large private equity firms who allegedly conspired with one another minimizing competition for target companies.  See Dahl v. Bain Capital Partners LLC, D. Mass., 07-12388, 3/13/13), http://www.bloomberglaw.com/public/document/Klein_et_a_v_Bain_Capital_Partners_LLC_et_at_Docket_No_107cv1238.

The plaintiffs previously held shares in various public companies that were, ultimately, acquired by private equity firms.  The complaint

FINRA issued an investor alert regarding the “unique characteristics and risks” presented by “alternative funds.”  See  http://op.bna.com/srlr.nsf/r?Open=rhil-98ktb8.

In a release, FINRA explained that “alt” mutual funds are United States Securities and Exchange Commission-registered and publicly offered, and hold “more non-traditional in-vestments and employ more complex trading strategies than traditional mutual funds.”  Alt funds, according

In its scrutiny of newly registered private fund advisers, the SEC Staff has observed two practices that might implicate broker-dealer registration requirements.

The first practice involves fund advisers that pay their personnel transaction-based compensation for selling interests in their funds or that have personnel whose primary purpose is selling interests in the funds. The second

The U.S. District Court for the District of New Jersey ruled that New Jersey fraud and misrepresentation claims by a venture capital firm over an unsuccessful investment in a telecom concern could proceed. See Edelson V LP v. Encore Networks Inc., D.N.J., Civ. No. 2:11-5802(KM), 5/9/13.  www.blomberglaw.com/public/document/EDELSON_V-LP-v_ENCORE -NETWORKS-INC-et_al_Docket_No_211cv05802_DNJ.

The plaintiff made an investment in a

A popular two-tier merger and acquisition structure may trigger certain prohibitions under the Securities Exchange Act of 1934.  In particular, this problem relates to the so-called “Burger King” structure, arising from the private equity fund acquisition of the fast-food chain by a private equity fund, and its simultaneous pursuit of a tender offer and a traditional one-step merger. 

The Burger

Private equity companies have recently been hit with a barrage of regulatory subpoenas.

Responding to these subpoenas may cost the private equity firms to expend millions of dollars.  These entities should have D&O liability insurance.  Initially, the entity must make sure that responding to such a subpoena falls within the definition of a claim.  Some policies may

This blog entry about hedge fund insurance coverage almost sounds like a car insurance commercial.  Sadly, both are critical in today’s modern society.

Given the current regulatory environment, volatile market conditions, and the public perception of the industry, hedge funds face enormous risk in doing business.  Hedge funds should carry both D&O and E&O Liability Insurance to protect directors, officers, managers and the