Search results

To introduce the concepts of interval funds and tender offer funds and compare them to other pooled investment vehicles.

This article provides an overview of the interval fund and tender offer fund structures, including the law, regulations and market practices regarding redemptions, liquidity, fees and expenses and other key terms.

Interval funds and tender offer funds should be considered by alternative investment managers seeking to expand into public markets or traditional fund managers that seek additional portfolio flexibility.

In addition to a plain English analysis of the rules and regulations applicable to interval funds and tender offer funds, the article analyzes market practices regarding redemption frequency and amount.

The purpose of this article is to describe the process for forming and registering a new investment company (or mutual fund) or converting an existing hedge fund into a mutual fund and registering the converted fund. This article discusses the timing, tax and regulatory implications under Delaware law, the US Internal Revenue Code of 1986, the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).

This article summarizes and analyzes rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to forming and registering new mutual funds and converting existing hedge funds into mutual funds under the 1940 Act and Advisers Act.

For smaller hedge fund managers who have recently registered with the SEC and desire to sponsor a new registered fund product as part of their advisory business, converting and registering an existing hedge fund is a viable alternative to forming an entirely new fund. The conversion process involves converting an existing hedge fund into a Delaware trust and then registering the new trust as a mutual fund under the 1940 Act. The adviser may, under certain circumstances, advertise the past performance of the hedge fund when marketing the new mutual fund. In addition, the adviser may continue to receive performance based or incentive compensation within the boundaries established by the Advisers Act. The authors believe that the conversion process is a viable and cost‐effective method for smaller hedge fund advisers to expand their existing investment advisory products and more easily grow assets under management.

This article provides a useful summary of the process for forming a new mutual fund or converting an existing hedge fund, including a brief outline of the SEC rules and regulations applicable to the fund registration process generally under the 1940 Act. Many hedge fund managers have recently incurred significant compliance costs as a result of registering as an investment adviser with the SEC. This article provides insight into the fund conversion process, which the authors believe is an overlooked and viable option for smaller hedge fund advisers to leverage existing compliance costs through sponsoring a registered fund product.

In the wake of the market timing, late trading, and conflict‐of‐interest‐related scandals in the investment company industry, the Securities and Exchange Commission (SEC) recently adopted rules and rule amendments designed to enhance the governance practices of registered investment companies, or “funds.” In an effort to protect shareholders and reduce conflicts of interest between fund boards and fund investment advisers, the SEC has adopted rules that, among other things, increase the required disclosure regarding approval of investment advisory contracts and prescribe the composition of and processes for fund boards. Under these new rules, funds that rely on certain SEC exemptive rules will be required to comply with new governance standards such as having an independent board chairmen and a 75% independent director majority and conducting annual board self‐evaluations. This article addresses the responsibilities fund boards will face in the wake of these new rules.

In the wake of the mutual fund scandals involving market timing and late‐day trading, the Securities and Exchange Commission recently issued new investment company governance regulations. The widely debated new rules require most investment companies to ensure that that at least 75% of their directors ‐ and the chairman of the board ‐ be “independent.” The new rules also require most funds to adopt other governance practices, including annual self‐evaluations and meetings in executive session without the presence of fund management. In the adopting release, the SEC also provided guidance on how fund directors should fulfill their fiduciary duties to fund shareholders. The SEC adopted these rules in light of several well publicized enforcement proceedings and anticipation of action by Congress.