From the monthly archives:

September 2008

Hedge Fund Formation Legal Fees

September 30, 2008

Question: How much does it cost to establish a hedge fund? Answer: The costs of starting a hedge fund can vary considerably depending on the manager and the manager’s circumstances.  A start up hedge fund manager will need to consider the hedge fund start up costs which will include legal costs, administration costs and set [...]

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Overview of hedge fund short sale rules and likely fallout from recent events

September 29, 2008

I received a request today to talk about hedge fund short sales and the likely fallout from the recent market disruptions and the failed bailout bill. Short Sale Ban The SEC has banned short sales on 800 individual securities.  These securities are generally within the financial services industry.  The ban on shorting these securities ends [...]

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NFA sends request for financials to Commodity Hedge Funds

September 29, 2008

Hedge fund managers which are licensed as commodity pool operators (CPOs) should have received an email from the NFA which requests certain financial information. While not disclosed on their website, the NFA sent a request on Friday to all of the CPO Members. Each member will need to make a filing which represents (i) the [...]

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Hedge Fund Redemptions and the Gate Provision

September 29, 2008

It is no secret that many funds are hurting this year and that many investors are getting ready to, or have, pulled money from many hedge funds.  According to a New York Times article this morning, these redemptions are likely to cause managers to sell securities which may in turn further depress prices.  While the [...]

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SEC ends CSE program for investment banks

September 28, 2008

Last week Goldman and Merril announced that they were going to convert to bank holding companies.  A good article on  the conversion, including questions and answers, can be found here. An interesting consequence of the change is that the SEC’s Consolidated Supervised Entities (CSE) program is no longer necessary. The CSE was a unique program [...]

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Hedge Fund 13F Filings

September 26, 2008

Many people talk about watching hedge funds through their 13F filings. A 13F filing is a quarterly report filed with the SEC by “institutional investment managers.” The reports include the name and number of the securities owned by the hedge fund. The term “institutional investment manager” means those managers who exercise discretion over $100mm or [...]

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Citibank to hedge funds – no bank accounts for you…

September 26, 2008

A client just informed me that Citibank will not consider opening a bank account for a hedge fund as of today.  Evidently Citibank’s compliance department thinks that being associated with hedge funds, even if it is merely through a simple bank account, is not wise in this climate.  I will be discussing this issue with [...]

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CFTC Fines Hedge Funds for Failure to File Annual Report with NFA

September 26, 2008

Certain hedge funds which trade futures and/or commodities as part of their investment program are deemed to be commodity pools and the hedge fund management company must register with the NFA as a commodity pool operator (CPO).  Registered CPOs must file annual reports with the NFA and such reports must be sent to investors in [...]

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SEC Wins another Hedge Fund Fraud Case – Provides Insight to Hedge Fund Managers

September 25, 2008

Hedge fund fraud cases are important because they give some definition and life to the various investment advisor and hedge fund laws.  Much of the advice that hedge fund lawyers give to their clients is based on reasonableness and best guesses on how the securities laws will be implemented in the hedge fund context.  For [...]

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SEC brings fraud charges against investment advisor in connection with hedge fund investments

September 25, 2008

Investment advisors who recommend hedge fund investments should be very careful to disclose all material agreements between the advisor and the hedge fund and hedge fund manager.  In the case below an investment advisor recommend hedge fund investments to its clients without disclosing to such clients that the advisor was receiving a part of the [...]

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