The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

Articles By Topic

By Topic: SEC Investigations

  • From Vol. 6 No.21 (May 23, 2013)

    How Can Hedge Fund Managers Prepare for an SEC Investigation and Maximize the Odds of Obtaining Insurance Coverage? (Part Two of Two)

    On May 2, 2013, a panel of experts from K&L Gates, Jamison & Co. L.L.C. and ACA Compliance Group hosted a webinar entitled, “Issues Arising from SEC Investigations of Private Fund Managers: How to Prepare for an Investigation and How to Maximize the Odds of Obtaining Insurance Coverage.”  This article, the second in a two-part series covering the webinar, addresses insurance coverage for hedge fund managers, including: an overview of directors and officers and errors and omissions policies; the state of the market for insurance coverage for hedge funds and managers; the risk of relying on fund indemnification without obtaining insurance; judicial decisions providing guidance on the scope of coverage, including with respect to SEC investigations; steps that funds and managers can take to maximize insurance coverage for SEC investigations; the SEC’s enforcement push; steps managers can take to formulate a plan for handling an SEC investigation; common mistakes managers make during investigations; and measures that managers can take to minimize enforcement risk.  See also “Hedge Fund D&O Insurance: Purpose, Structure, Pricing, Covered Claims and Allocation of Premiums Among Funds and Management Entities,” The Hedge Fund Law Report, Vol. 4, No. 41 (Nov. 17, 2011).

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  • From Vol. 6 No.20 (May 16, 2013)

    How Can Hedge Fund Managers Prepare for an SEC Investigation and Maximize the Odds of Obtaining Insurance Coverage? (Part One of Two)

    On May 2, 2013, a panel of experts from K&L Gates, Jamison & Co. L.L.C. and ACA Compliance Group hosted a webinar entitled, “Issues Arising from SEC Investigations of Private Fund Managers: How to Prepare for an Investigation and How to Maximize the Odds of Obtaining Insurance Coverage.”  This article, the first in a two-part series covering the webinar, addresses the SEC’s enforcement push against hedge fund managers; steps managers can take to formulate a plan for handling an SEC investigation; common mistakes managers make during investigations; and measures that managers can take to minimize enforcement risk.  For our coverage of current SEC enforcement priorities, see “SEC Commissioner Aguilar Discusses Insider Trading by Hedge Fund Managers, Valuation and Other Examination and Enforcement Pressure Points,” The Hedge Fund Law Report, Vol. 6, No. 18 (May 2, 2013).

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  • From Vol. 2 No.3 (Jan. 21, 2009)

    How to Prepare for an SEC Investigation: The Pequot Precedent

    For more than five years, the SEC has been conducting an on-and-off investigation of potential securities law violations by hedge fund management firm Pequot Capital Management.  The investigation relates to trades that took place nearly eight years ago, and according to people with knowledge of the case, the SEC has recently re-opened its investigation.  Regardless of the ultimate outcome of the SEC’s investigation, the time, expense and distraction involved in the Pequot investigation – or any investigation – can siphon scarce resources away from revenue-generating activities, cause reputational harm, undermine fundraising efforts and otherwise interrupt the management of a hedge fund firm.  The Pequot investigation therefore raises the questions: how can hedge fund managers avoid an SEC investigation?  And, if the SEC initiates an investigation, what is the best way to respond?  We answer these two questions in detail, and conclude with a “to do” list for hedge fund managers seeking to minimize the likelihood of an SEC investigation, or to minimize the gravity and disruption of an investigation once initiated.

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