The Revolution in U.S. Law Governing NonResident Money Managers
April 27, 2011 – Webinar
Stuart E. Fross, Partner, K&L Gates, Boston, MA
Cary J. Meer, Partner, K&L Gates, Washington, D.C.
Ingrid Pierce, Partner, Walkers, Cayman Islands
Jennifer Thomson, Partner, Walkers, Cayman Islands
DC-9204867 v1
Copyright © 2011 by K&L Gates LLP. All rights reserved.
I. Overview of U.S. Regulation
U.S. federal regulation of money managers and collective
investment schemes (“funds”) encompasses two interconnected sets of laws:
ƒ Investment Advisers Act of 1940 (the “Advisers Act”) – regulates
“investment advisers”
ƒ Provides for registration of advisers and regulation of their activities
ƒ Includes advisers to separate accounts and/or funds
ƒ Can include U.S. or non-U.S. advisers - jurisdiction governed by
“conducts and effects” test
ƒ Investment Company Act of 1940 (the “Investment Company
Act”) – regulates collective investment schemes
ƒ Requires registration of some funds (such as mutual funds)
ƒ Provides exemptions for other funds that meet certain requirements
ƒ Non-U.S. funds are ineligible to register as investment companies under the
Investment Company Act
1
I. Overview of U.S. Regulation - Advisers
Definition of “investment adviser” in the Advisers Act
is broad, and includes any person who:
ƒ for compensation, engages in the business of
advising others, either directly or through
publications or writings, as to the value of
securities or as to the advisability of investing in,
purchasing, or selling securities, or
ƒ for compensation and as part of a regular
business, issues or promulgates analyses or
reports concerning securities
2
I. Overview of U.S. Regulation - Advisers
Includes exemptions from the definition for, among
others:
ƒ Banks (not including non-U.S. banks)
ƒ Certain FINRA-member broker-dealers (not
including non-U.S. brokers that are not FINRA
member firms)
ƒ Publishers of newspapers, news magazines or
business or financial publications of general and
regular circulation
ƒ Advisers providing advice solely with respect to
U.S. government securities
3
I. Overview of U.S. Regulation - Advisers
ƒ Generally, an investment adviser must have a
minimum amount of assets under management
(subject to exceptions) to qualify for federal
investment adviser registration (as discussed below)
ƒ This minimum AUM requirement does not apply to an
adviser without a place of business in the U.S.
ƒ If an adviser does not register under the Advisers
Act, it must consider whether it must register with one
or more states
4
I. Overview of U.S. Regulation - Funds
ƒ Hedge funds, private equity funds, venture funds
and similar investment schemes are generally
structured to avoid registration under the
Investment Company Act (“Private Funds”)
ƒ Private Funds are also offered and sold pursuant
to an exemption (or combination of exemptions)
from registration under the Securities Act of 1933
relating to the offer and sale of the securities
issued by the Private Fund
ƒ Regulation D – private placement to U.S. or non-U.S.
investors
ƒ Regulation S – offers made in an “offshore transaction”
without “directed selling efforts” in the U.S.
5
I. Overview of U.S. Regulation - Funds
ƒ Registration as an investment company under the Investment
Company Act is impractical for Private Funds
ƒ Registered investment companies are subject to, among other
things:
ƒ Significant ongoing disclosure requirements including quarterly and annual
public filings
ƒ Restrictions on debt issuance and preferred classes of equity
ƒ Restrictions on transactions with affiliates and joint transactions
6
II. The Dodd-Frank Act
The Act rescinds the “private adviser
exemption” effective July 21, 2011 (unless
postponed)
ƒ Many U.S. and non-U.S. advisers rely on the
private adviser exemption to remain
unregistered
ƒ Private adviser exemption (Section 203(b)(3) of
the Advisers Act) exempts an adviser that:
ƒ during any rolling 12-month period had fewer than 15 clients
ƒ does not serve as an adviser to a registered investment
company or business development company (“BDC”) under
the Investment Company Act and
ƒ does not hold itself out to the public as an investment adviser
ƒ Generally, a fund counts as a single client
7
II. The Dodd-Frank Act (cont.)
ƒ Many advisers that relied on the private adviser
exemption will be required to register or qualify for an
exemption
ƒ Advisers that do not qualify for federal registration
must register with one or more states
ƒ Does not apply to a non-U.S. adviser with no place of
business in the United States – these advisers automatically
qualify for federal registration
ƒ State regulatory regimes vary and may be similar to or very
different than federal registration and Advisers Act regulation
8
III. New Exemptions
The Dodd-Frank Act creates or directs the SEC to
create new exemptions from registration
Two most relevant to non-U.S. advisers are:
ƒ Private fund adviser exemption
ƒ Foreign private adviser exemption
These exemptions are mutually exclusive
9
IV. Private Fund Adviser Exemption
ƒ Section 408 of the Dodd-Frank Act provides an
exemption from registration under the Advisers
Act for:
ƒ An adviser that acts as an investment adviser
solely to qualifying “private funds” with assets
under management in the U.S. of less than $150
million
ƒ SEC proposed rules interpreting the exemption on
November 19, 2010
ƒ Proposed rules have not yet been adopted
10
IV. Private Fund Adviser Exemption (cont.)
ƒ The proposed rules define “qualifying private
funds” for this purpose as collective investment
schemes that are not registered under the
Investment Company Act and have not elected
to be treated as BDCs
11
IV. Private Fund Adviser Exemption (cont.)
Private Fund Adviser Exemption
ƒ Under management in the U.S.– Proposed
Rules
ƒ An adviser that has its principal office and place of business
outside the U.S. but that does not have a U.S. place of
business is treated differently from one with a U.S. place of
business
ƒ Place of business is defined in Advisers Act Rule 222-1 to
mean:
ƒ An office at which the adviser regularly provides investment
advisory services, solicits, meets with or otherwise
communicates with clients and
ƒ Any other location that is held out to the general public as a
location at which the adviser provides investment advisory
services, solicits, meets with or otherwise communicates with
clients
12
IV. Private Fund Adviser Exemption (cont.)
ƒ Under management in the U.S.– Proposed Rules
ƒ In order to rely on the exemption, an adviser without a U.S.
place of business:
ƒ cannot have U.S. separate account clients
ƒ can accept U.S. investors in U.S. or non-U.S. private funds
and
ƒ can have other types of clients outside the U.S.
ƒ In order to rely on the exemption, an adviser with a U.S.
place of business:
ƒ Cannot have U.S. separate account clients
ƒ Cannot manage the accounts of clients from the U.S. office
(whether a U.S. client or otherwise) that are not qualifying
private funds
ƒ Cannot manage $150 million or more in AUM from the U.S.
place of business
13
IV. Private Fund Adviser Exemption (cont.)
ƒ $150 million AUM limit – Proposed Rules
ƒ Must be calculated by reference to the AUM
calculation method in proposed ADV Part 1A Item
5.F
ƒ Net asset value calculation
ƒ All assets of a qualifying private fund must be treated as
a “securities portfolio”
ƒ Must be calculated based on current market value
ƒ Must include assets of any qualifying private fund, even
if it is:
‰
‰
Proprietary money and/or
Assets managed without compensation
ƒ Must include any uncalled capital commitments
ƒ Cannot back out liabilities
14
IV. Private Fund Adviser Exemption (cont.)
ƒ $150 million AUM limit – Proposed Rules
ƒ AUM must be calculated on a quarterly basis
ƒ If an adviser exceeds the limit, it has one quarter to
come back into compliance or to register
ƒ The one-quarter grace period is only available to
advisers that are current on reporting obligations
(discussed below)
15
IV. Private Fund Adviser Exemption (cont.)
ƒ Subject to Reporting and Inspection
ƒ Although exempt from registration, a private fund
adviser:
ƒ Must make certain publicly-available reports through the
Investment Adviser Registration Depository system
(“IARD”)
ƒ Is subject to inspection by the SEC staff as if it were
registered
16
IV. Private Fund Adviser Exemption (cont.)
ƒ Reporting
ƒ A private fund adviser must file a very limited subset
information referenced on Form ADV Part 1A, including
identifying information, form and state of organization,
executive officers, direct and indirect owners, disciplinary
history and information about private funds
ƒ As proposed, unless postponed, a private fund adviser
initially would have to file the sections of the amended Form
ADV Part 1A no later than August 20, 2011
17
V. Foreign Private Adviser
ƒ Section 402(a) of the Dodd-Frank Act provides an
exemption from registration under the Advisers Act for a
non-US adviser that meets the definition of “foreign
private adviser”
ƒ “Foreign private adviser” means an adviser that:
ƒ has no place of business in the U.S.
ƒ has fewer than 15 clients and investors in the U.S. in private
funds
ƒ has less than $25 million AUM (subject to increase by SEC
rule) attributable to such clients and investors
ƒ does not hold itself out generally to the public in the U.S. as
an investment adviser and
ƒ does not act as an investment adviser to any registered
investment company or BDC
18
V. Foreign Private Adviser (cont.)
ƒ Place of business
ƒ Defined in the same way as in the context of the
private adviser exemption, discussed above
ƒ “In the United States” means the United States of
America, its territories and possessions, any
State of the United States, and the District of
Columbia
19
V. Foreign Private Adviser (cont.)
ƒ Who is an investor?
ƒ A “beneficial owner”
ƒ Must, however, count as investors its U.S.
“knowledgeable employees” invested in a fund
ƒ Must look through certain entities to underlying
investors in some cases
ƒ Includes holders of any of the issuer’s securities,
including both debt and equity
20
V. Foreign Private Adviser (cont.)
ƒ Who is an investor?
ƒ Adviser must look through record holders of securities if the
economic risk of the investment has been transferred by that
record holder to a third-party U.S. person, such as through a
total return swap, barrier call option or other derivative
ƒ Will require additional representations in subscription
agreements
ƒ May be difficult for adviser to discern
ƒ Look-throughs are intended prevent a foreign private adviser
or a third party from creating nominee accounts or other
vehicles in which U.S. investors pool money to keep the
foreign private adviser from counting the underlying U.S.
investors
21
V. Foreign Private Adviser (cont.)
ƒ Client or Investor “in the United States”
ƒ Determined by generally incorporating concepts from
Regulation S (an exemption from 1933 Act registration for
offerings made in an offshore transaction)
ƒ A client or investor is deemed “in the United States” if it
would be a U.S. person under Regulation S
ƒ Except that a discretionary account or similar account held for
the benefit of a person “in the United States” by a non-U.S.
dealer or other professional fiduciary is deemed “in the United
States” if the dealer or professional fiduciary is a related
person of the foreign private adviser
ƒ Status is judged at the time of becoming a client or at the
time of acquisition of private fund securities
22
V. Foreign Private Adviser (cont.)
ƒ Counting clients
ƒ Proposed rules borrow principles of client counting from
private adviser exemption
ƒ A foreign private adviser must count a client even if the
adviser receives no compensation from the client for its
services
ƒ If an adviser were required to count one or more U.S.
investors in a fund, it would not have to count separately the
fund as a U.S. client
23
V. Foreign Private Adviser (cont.)
ƒ Calculating AUM for $25 million limit
ƒ Must be calculated by reference to net asset value
calculation in proposed ADV Part 1A Item 5.F
ƒ All assets of a qualifying private fund must be treated as
a “securities portfolio”
ƒ Must be calculated based on current market value
ƒ Must include assets of any qualifying private fund, even
if it is:
‰
‰
Proprietary money
Assets managed without compensation
ƒ Must include any uncalled capital commitments
ƒ Cannot back out liabilities
24
V. Foreign Private Adviser (cont.)
ƒ Foreign private advisers are not subject to
reporting, recordkeeping rules or inspection by
SEC staff
ƒ SEC has the authority to raise the $25 million limit,
but chose not to do so likely because of this lack
of regulation
ƒ Key issues
ƒ Less flexible exemption than private fund adviser;
lower AUM limit
ƒ Permits separate account clients, but must count
U.S. investors even in non-U.S. funds
25
VI. Exemption Application Chart
CLIENTS/INVESTORS
ASSETS UNDER
MANAGEMENT
SEC REQUIREMENTS
STATE REQUIREMENTS
Non-U.S. adviser to private funds
and/or managed accounts with <15
US clients or investors and no
place of business in the US
AUM (attributable to U.S.
clients/investors) < $25M
Exempt from registration
No record-keeping or reporting
requirements
States are permitted to require
registration, if meet minimum state
nexus test
Non-U.S. adviser to private funds
and/or managed accounts with 15
or more US clients or investors
Any amount
SEC registration required
Subject to record-keeping and
reporting requirements required
by Advisers Act (including SEC
examination)
No state registration permitted
Non-U.S. adviser to private funds
and/or managed accounts with US
clients or investors
AUM (attributable to U.S.
clients/investors) ≥ $25M
SEC registration required
Subject to record-keeping and
reporting requirements required
by Advisers Act (including SEC
examination)
No state registration permitted
Non-U.S. adviser solely to private
funds (U.S. or non-U.S.)
AUM managed from an
office in the U.S. < $150M
Exempt from registration
Subject to record-keeping and
reporting requirements as SEC
determines (including SEC
examination)
States are permitted to require
registration, if meet minimum state
nexus test
Non-U.S. adviser solely to private
funds (U.S. or non-U.S.)
AUM managed from an
office in the U.S. ≥ $150M
SEC registration required
Subject to record-keeping and
reporting requirements required
by Advisers Act (including SEC
examination)
No state registration permitted
26
VII. Regulation Lite and Participating Affiliates
ƒ “Regulation Lite”
ƒ Prior to the Dodd-Frank Act, the SEC took the
position that the substantive provisions of
Advisers Act regulation did not apply to a
registered non-U.S adviser’s non-U.S. clients
(including non-U.S. funds with U.S. investors)
ƒ Position was based on no-action and interpretive
guidance and was reaffirmed as recently as 2006
27
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ “Regulation Lite”
ƒ Under “Regulation Lite,” with respect to its nonU.S. clients:
ƒ The adviser was required to maintain and upon request
provide records with respect to non-U.S. funds and
clients and
ƒ Its non-U.S. client activities would be subject to
inspection but would not be governed by the Advisers
Act
ƒ Regulation lite was based upon the conducts and
effects test for extra-territorial application of the
Advisers Act
28
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ “Regulation Lite”
ƒ It is unclear whether the staff will continue to apply
“regulation lite” given that it is requiring non-U.S.
advisers to look through non-U.S. funds to U.S.
investors
ƒ Represents a shift in approach to non-U.S. funds
29
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ Participating Affiliates
ƒ Prior to the Dodd-Frank Act, the SEC staff
permitted unregistered, non-U.S. advisers to
provide investment advice with respect to U.S.
clients of an SEC-registered affiliate subject to
certain conditions (discussed below)
ƒ This was based on staff no-action and interpretive
guidance
ƒ Most widely known of these no-action letters is the
“Unibanco” no action letter – Uniao de Bancos de
Brasileiros S.A., SEC No-Action Letter (July 28, 1992)
30
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ
Unibanco line of letters requirements:
ƒ
ƒ
ƒ
Registered adviser and participating affiliates
must be (and act as) separate legal entities
Participating affiliate must appoint a U.S. agent
for service of process (and must maintain such
an agent until six years after it ceases providing
advice to the registered adviser’s U.S. clients)
Participating affiliate must submit to the
jurisdiction of the U.S. courts for actions arising
under the U.S. securities laws in connection with
investment advisory activities for U.S. clients of
registered adviser
31
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ Personnel of participating affiliate whose duties or
functions relate to the determination and
recommendation of securities trades made with
respect to the U.S. clients, or who have access to
any information concerning securities being
recommended to U.S. clients prior to dissemination
of such recommendations:
ƒ Will be treated as “associated persons” of the registered
adviser and
ƒ Should be treated, when applicable, as “supervised persons”
or “access persons” under the registered adviser’s code of
ethics and policies and procedures
32
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ Participating affiliate must maintain certain records required by
the Advisers Act
ƒ For all transactions the participating affiliate must maintain the
records required by Advisers Act Rule 204-2(a)(1), (2), (4), (5) and
(6)
ƒ With respect to transactions involving U.S. clients and all related
transactions, the participating affiliate must retain records of the
type described in Advisers Act Rule 204–2(a)(3) and (7)
ƒ All the books and records must be maintained and preserved:
ƒ in an easily accessible place in the country where such records are
kept and
ƒ for a period of not less than five years from the end of the fiscal
year during which the last entry was made on such book or record
ƒ To the extent that any books and records are not kept in
English, the participating affiliate must translate records into
English upon reasonable advance request by the SEC
33
VII. Regulation Lite and Participating Affiliates (cont.)
ƒ
Participating affiliate must agree to:
ƒ
ƒ
ƒ
ƒ
Provide above records to the SEC staff upon receipt of an administrative
subpoena, demand or a request for voluntary cooperation made during a
routine or special inspection or otherwise
Make available for testimony or questioning by the SEC such personnel
(other than clerical or ministerial personnel) identified by the SEC as
having access to or having been involved in giving advice to be used for
or on behalf of the registered adviser’s U.S. clients or related
transactions
ƒ
Testimony or questioning takes place at such place as the SEC may
designate in the U.S. or, at the SEC’s option, in the country where
the personnel reside
ƒ
Does not require personnel to testify with respect to the identity of
non-U.S. clients
Authorize all personnel to testify about all advice to be used for or on
behalf of the U.S. clients of the registered adviser and any related
transactions
Not to contest the validity of administrative subpoenas for testimony or
documents (except with respect to the identity of non-U.S. clients of
participating affiliate) under any non-U.S. laws or regulations
34
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ Many registered advisers enter into agreements
with participating affiliates that intend to provide
advisory services with respect to the registered
adviser’s U.S. clients
ƒ These agreements specifically address each
topic listed above and require the participating
affiliate to make representations regarding such
topics
35
VII. Regulation Lite and Participating Affiliates
(cont.)
ƒ Participating Affiliates
ƒ It is unclear whether the SEC staff will confirm that
the Unibanco guidance continues to apply
ƒ In the release proposing the private adviser
exemption and foreign private adviser exemption,
the SEC requested comment on this guidance in
light of the new exemptions
36
VIII. What’s Involved With SEC Registration
The SEC registration process will take 3-6 months, so
advisers need to start planning now
ƒ Fund managers will have to be registered by July
21, 2011, and private fund managers will have to
make the applicable filings by August 20, 2011,
unless the deadlines are postponed
ƒ Once an adviser has filed with the SEC, the SEC has 45
days either to approve registration or take action to deny it
ƒ This means that, unless the deadline is postponed, you must
submit your registration filing by no later than the beginning
of June
ƒ Once your registration becomes effective, you must be in full
compliance with the Advisers Act
37
VIII. What’s Involved With SEC Registration
(cont.)
ƒ To prepare for registration, each adviser will have to prepare a
Form ADV (SEC filing) as well as a compliance manual and
code of ethics
ƒ These are complicated and interdependent documents that will
have to be tailored to the adviser’s operations and implemented in
practice
ƒ Larger and more complex advisers may have to restructure
some of their business operations to comply
ƒ Fund documents may need to be reviewed and revised
ƒ e.g., subscription documents questionnaire must address “qualified
client” status to receive performance allocation or carried interest
38
VIII. What’s Involved With SEC Registration
(cont.)
ƒ Part 1 – SEC’s Examination Blueprint
ƒ General identifying information about your firm,
advisory business (including employees, clients,
compensation, assets under management, advisory
activities and other business activities), financial
industry affiliations, participation or interest in client
transactions, custody, control persons and ownership
and disciplinary history
ƒ Part 2 – Client Brochure
ƒ Part 2A – plain English disclosure about your business
practices, fees, investment strategies and risks,
conflicts of interest and disciplinary information
ƒ Part 2B – supplement focused on advisory personnel
39
VIII. What’s Involved With SEC Registration
(cont.)
ƒ Part 1A and 2A are filed and maintained
online through the IARD, a national electronic
depository
ƒ Requires setting up an account and getting a
number
ƒ Part 1A and 2A are publicly available
ƒ Annual filing and delivery requirements
ƒ Must amend if materially inaccurate (and
redeliver if change to disciplinary information)
40
VIII. What’s Involved With SEC Registration
(cont.)
ƒ Before your registration goes effective
ƒ Complete compliance policies and procedures
ƒ Appoint “qualified” Chief Compliance Officer
ƒ Adopt Code of Ethics addressing:
ƒ Conflicts of interest
ƒ Material non-public information/insider trading
ƒ Personal trading
ƒ Gifts and entertainment
ƒ Political contributions
ƒ Pay-to-play
41
IX. The Substance of Advisers Act Regulation
ƒ The SEC now can bring enforcement actions for
brochure misstatements and omissions
ƒ Section 206(2): Negligence without intent to defraud
as fraud
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Specific anti-fraud rules as regulatory devices
Cross transactions/agency cross rule
Principal transactions
Custody of client assets
Use of solicitors
Proxy voting
Pay-to-play rule (political contributions)
Disclosure to hedge fund investors
Advertising rules
42
IX. The Substance of Advisers Act Regulation
(cont.)
ƒ Specific Guidance
ƒ Section 206 (general antifraud provision of
Advisers Act)
ƒ Rule 206(4)-1 (SEC advertising rule)
ƒ No-action letters
ƒ Enforced through SEC inspections and
enforcement actions
ƒ Disclosure rules not calculation rules
43
IX. The Substance of Advisers Act Regulation
(cont.)
What is an Investment Adviser Advertisement?
ƒ “Any written communication addressed to more
than one person” that offers investment advisory
services related to securities
ƒ Includes communications designed to maintain
existing clients or solicit new clients
ƒ Includes electronic and broadcast
advertisements
ƒ Example enforcement action:
ƒ In re Seaboard Investment Advisers Inc.
ƒ Advertised performance from a previous employer without
disclosing the source or providing documentation
44
X. SEC Inspections
• Three Types of Inspections
• A routine examination is conducted on a periodic basis
• A “for cause” examination is conducted upon suspicion
of a problem at a firm and is typically unannounced
and
• A sweep examination is a special review focusing on a
specific industry issue
• A firm undergoing an examination will not typically be
privy to the type of examination taking place, but the
firm may inquire as to the nature of the exam in the
entrance interview (discussed in more detail below)
• Examinations may be announced or unannounced
45
X. SEC Inspections (cont.)
ƒ Current Areas of Focus for Examinations
Control environment
Conflicts of interest
Portfolio management
Pricing of client portfolios and calculation of NAV
Performance advertising, marketing and fund
distribution activities
ƒ Safety of clients’ and funds’ assets
ƒ Inadequate/inaccurate disclosures in ADV or offering
documents
ƒ
ƒ
ƒ
ƒ
ƒ
46
X. SEC Inspections (cont.)
ƒ Other Areas of Interest for SEC Exams
ƒ Books and records
ƒ Referral arrangements (solicitors/consultants)
ƒ Use of client commissions (soft dollars)
ƒ Recidivism (breach logs)
ƒ Prime brokerage arrangements
ƒ Trading and allocation procedures
ƒ Revenue sharing
ƒ E-mail retention
47
X. SEC Inspections (cont.)
ƒ Producing Information to the SEC Staff
ƒ SEC staff will request information in a number of forms
including:
ƒ Document requests
ƒ Interviews
ƒ Demonstrations/walk-through
ƒ Important to request confidential treatment of
materials produced
48
X. SEC Inspections (cont.)
ƒ Attorney-Client Privilege
ƒ An adviser is not required to produce documents that
are subject to the attorney-client privilege
ƒ Generally, the attorney-client privilege is applicable to:
ƒ Communications
ƒ Between the attorney and client
ƒ Made in confidence and
ƒ For the purpose of seeking or obtaining legal assistance
49
X. SEC Inspections (cont.)
ƒ Possible Outcomes of an Examination
ƒ No Further Action Letter noting no deficiencies
(rare)
ƒ Deficiency Letter – A detailed response identifying
corrective actions should be drafted as soon as
possible
ƒ Referral to the Division of Enforcement
(approximately 10% of all exams)
ƒ Enforcement Action (approximately 2% of all
exams)
50
X. SEC Inspections (cont.)
ƒ After the Examination
ƒ Respond promptly to any deficiency letter
ƒ Take any necessary corrective action
ƒ Prepare for next examination
51
XI. Conclusions – What Registration Means
ƒ Your personal affairs will be effected:
ƒ Personal trading/gifts
ƒ Political contributions to U.S candidates
ƒ Day-to-day conduct of your business will change:
ƒ e.g., books and records
ƒ Conflicts of interest
ƒ Living with your compliance policies
ƒ Client acquisition will change:
ƒ Contractual provisions and fees
ƒ Advertising process
ƒ Third-party solicitors
ƒ Accountability to a regulator
ƒ Inspection/Enforcement
52
Stuart E. Fross, Partner, Boston, MA
Stuart Fross is a partner in K&L Gates' Boston office where he
concentrates his practice on securities as part of the Investment
Management Practice Group. Mr. Fross is involved in all aspects of
fund management for both domestic and international funds,
including formation of new funds, strategic planning and contract
matters, with particular focus on securities regulatory compliance.
Mr. Fross assists clients with fund management operations, fund
formation and fund distribution with respect to U.S. registered
open-end funds, U.S. registered closed end funds, U.S. exchange
traded funds, bank collective investment funds, Canadian 81-102
Funds, UCITS funds sold in the European Union, the U.S., South
America, Japan, Taiwan and Hong Kong, as well as private funds,
organized in the U.S. and offshore. Mr. Fross has extensive
experience in equity, high-income and fixed income trading
operations, as well as development of ETFs.
Email: stuart.fross@klgates.com
Telephone: (617) 261-3135
53
Cary J. Meer, Partner, Washington, D.C.
Ms. Meer advises hedge fund and fund-of-funds managers on the
organization and structuring of private investment funds, as well as
on compliance issues, including under the Investment Advisers Act
of 1940 and whether their futures-related trading or advice brings
them within the regulatory structure of the Commodity Exchange
Act. She also provides advice to non-U.S. managers and funds
regarding marketing in the United States. She is also active in
negotiating and structuring acquisitions and dispositions of hedge
fund
managers,
investment
advisers,
broker-dealers,
administrators and other financial services firms, and strategic
alliances and joint-ventures with financial services.
Email: cary.meer@klgates.com
Telephone: (202) 778-9107
54
Ingrid Pierce, Partner, Cayman Islands
Ingrid Pierce is a partner in the Global Hedge Fund Group and is
head of the Cayman Hedge Fund Practice of Walkers. She has
over 18 years’ experience in advising fiduciaries and represents
major institutions, fund managers, directors and trustees in all
aspects of investment funds, including structuring and ongoing
operations. Ingrid advises on directors’ duties and responsibilities,
indemnities, confidentiality laws and issues related to electronic
communication. She has particular expertise in advising funds on
managing distress in volatile markets. She regularly advises some
of the largest financial institutions on their stable of Cayman
Islands funds and recently acted as counsel to significant investors
and managers in connection with the restructuring and winding
down of various high profile funds.
Email: ingrid.pierce@walkersglobal.com
Telephone: +1 345 814 4667
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Jennifer Thomson, Partner, Cayman Islands
Jen Thomson is a partner in Walkers' Global Investment Funds
Group. She specialises in both hedge funds and private equity
funds. Jen acts for several large UK and US-based investment
managers, including fund-of-funds managers, in connection with
the development, launch and operation of their Cayman Islands
investment fund products, working extensively with their
associated administrators, listing agents and other service
providers.
Prior to joining Walkers in 1999, Jen practised for four years with
Maclay Murray & Spens, a leading Scottish corporate firm.
Email: jennifer.thomson@walkersglobal.com
Telephone: +1 345 914 4280
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