The Hedge Fund Law Report

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

Articles By Topic

By Topic: Foreign Corrupt Practices Act

  • From Vol. 10 No.7 (Feb. 16, 2017)

    SEC Brings Enforcement Action for FCPA Violations Against Two Och-Ziff Employees 

    In the wake of the SEC’s September 2016 settlements with Daniel S. Och, Joel M. Frank, Och-Ziff Capital Management LLC (OZ) and OZ Management LP, the SEC has taken aim at two additional OZ employees – senior executive Michael L. Cohen and analyst Vanja Baros. In a complaint filed in the U.S. District Court for the Eastern District of New York, the SEC asserts that, by arranging to pay bribes to numerous government officials in Africa to secure lucrative deals for OZ funds and misleading an OZ investor in the process, Cohen and Baros violated the Foreign Corrupt Practices Act, anti-fraud provisions of the Investment Advisers Act of 1940 and certain provisions of the Securities Exchange Act of 1934. For our full coverage of the OZ settlement, see “Five Compliance Lessons Private Fund Managers Can Glean From Och-Ziff’s FCPA Settlement” (Nov. 3, 2016); and “Recent SEC and DOJ Settlements With Och-Ziff and Two Executives Underscore FCPA Compliance Risks to Private Fund Managers” (Oct. 27, 2016).

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  • From Vol. 9 No.43 (Nov. 3, 2016)

    Five Compliance Lessons Private Fund Managers Can Glean From Och-Ziff’s FCPA Settlement

    Private fund managers should pay attention to Och-Ziff’s recent settlements with both the SEC and DOJ for violations of the Foreign Corrupt Practices Act (FCPA). Since the SEC launched a unit dedicated to enforcing compliance with the FCPA in 2010, many in the industry have speculated that it was only a matter of time until private funds became the focus of the SEC from an FCPA perspective. See “Private Equity FCPA Enforcement: High Risk or Hype?” (Feb. 19, 2015); and “The SEC’s Investigation of FCPA Violations and Sovereign Wealth Funds – Implications for Hedge Funds" (Feb. 3, 2011). Although its initial interest in FCPA compliance by private funds centered on a manager’s dealings with sovereign wealth funds, as the Och-Ziff settlements demonstrate, the SEC has expanded its review to cover investment transactions, particularly those conducted in high-risk jurisdictions. This change of focus has likely left some hedge funds, private equity firms, banks and other financial firms unprepared and potentially exposed from an anti-corruption perspective, as these institutions have historically focused the majority of their compliance resources related to foreign activities on anti-money laundering and sanctions programs. The details of the case, along with the terms of the company’s settlement, offer five key compliance lessons for firms in this industry. For details on the facts underlying the case and the terms of the settlement see our companion article “Recent SEC and DOJ Settlements With Och-Ziff and Two Executives Underscore FCPA Compliance Risks to Private Fund Managers” (Oct. 27, 2016).

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  • From Vol. 9 No.42 (Oct. 27, 2016)

    Recent SEC and DOJ Settlements With Och-Ziff and Two Executives Underscore FCPA Compliance Risks to Private Fund Managers

    The SEC and DOJ recently announced a settlement with Och-Ziff Capital Management (Och-Ziff) and two of its employees for more than $400 million. The settlement papers suggest that the firm’s compliance policies and procedures were not sufficiently robust to prevent violations of the Foreign Corrupt Practices Act (FCPA) – both in terms of procuring investors and when making private equity investments. Events leading to the settlements include allegations that employees of the company worked with intermediaries with questionable backgrounds and known ties to government officials. Once investments were made, it does not appear that checks and balances were in place to ensure that investor funds were spent appropriately. According to a team of attorneys from MoloLamken, including partners Justin Shur and Jessica Ortiz as well as associate Eric Nitz, the settlement is a “significant development” in both the FCPA and hedge fund worlds. “For a number of years, the DOJ and the SEC have indicated that their FCPA enforcement efforts are focused on private equity and hedge funds,” they said, “but the Och-Ziff settlement is the first major move in that direction. And it’s a significant one: the case represents one of the largest FCPA settlements in history against one of the world’s largest hedge funds.” A companion article in our next issue will distill further compliance takeaways from the case. See “FCPA Compliance Strategies for Hedge Fund and Private Equity Fund Managers” (Jun. 13, 2014); as well as our two-part series on FCPA risks and concerns for private fund managers: Part One (May 28, 2015); and Part Two (Jun. 11, 2015).

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  • From Vol. 8 No.47 (Dec. 3, 2015)

    ALM General Counsel Summit Reveals How Hedge Fund Managers Can Adopt a Robust Compliance Program and Address FCPA Risks

    The SEC continues to pursue enforcement actions for major, as well as minor, infractions.  See our two-part series on the SEC’s “Broken Windows Approach: Part One, Vol. 8, No. 37 (Sep. 24, 2015); and Part Two, Vol. 8, No. 38 (Oct. 1, 2015).  In this environment, hedge fund managers need to ensure they have sufficient compliance programs in place to guard against violations and ward off potential SEC actions.  Additionally, the financial services industry remains a prominent focus for Foreign Corrupt Practices Act (FCPA) enforcement, and the FCPA is becoming a more significant part of hedge fund compliance programs, particularly for those that invest or market globally.  For more, see “FCPA Compliance Strategies for Hedge Fund and Private Equity Fund Managers,” The Hedge Fund Law Report, Vol. 7, No. 23 (Jun. 13, 2014).  Speakers at Corporate Counsel’s Ninth Annual Hedge Fund General Counsel and Compliance Officer Summit addressed the foregoing, illustrating elements of a robust compliance program and addressing FCPA requirements.  This article summarizes those panel discussions.  For additional coverage of the Summit, see “ALM General Counsel Summit Reveals How Hedge Fund Managers Can Prepare for SEC Examinations,” The Hedge Fund Law Report, Vol. 8, No. 45 (Nov. 19, 2015).

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  • From Vol. 8 No.23 (Jun. 11, 2015)

    WilmerHale Attorneys Discuss FCPA Risks Applicable to Private Fund Managers (Part Two of Two)

    The financial services industry is under increased scrutiny from anti-corruption enforcement authorities in the U.S. and abroad.  Foreign Corrupt Practices Act (FCPA) enforcement actions have the potential to implicate hedge funds, private fund managers and even fund investors themselves.  Accordingly, hedge fund managers must be aware of FCPA risks and take steps to mitigate them.  See “FCPA Compliance Strategies for Hedge Fund and Private Equity Fund Managers,” The Hedge Fund Law Report, Vol. 7, No. 23 (Jun. 13, 2014); and “FCPA Considerations for the Private Fund Industry: An Interview with Former Federal Prosecutor Justin Shur,” The Hedge Fund Law Report, Vol. 7, No. 20 (May 23, 2014).  This article, the second in a two-part series, summarizes the main points raised at a recent program regarding FCPA risks threatening private fund managers and summarizes recent FCPA enforcement actions involving financial institutions.  The program featured WilmerHale partners Kimberly A. Parker and Erin G.H. Sloane.  The first article in this series summarized the key points from that presentation regarding the current U.S. and global anti-corruption enforcement climate and the relevant provisions of the FCPA.

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  • From Vol. 8 No.21 (May 28, 2015)

    WilmerHale Attorneys Discuss FCPA Concerns for Private Fund Managers (Part One of Two)

    The U.S. has taken the lead in anti-corruption efforts through its vigorous enforcement of the Foreign Corrupt Practices Act (FCPA), and in recent years, regulators around the globe have started to follow suit.  See “Anti-Bribery Compliance for Private Fund Managers,” The Hedge Fund Law Report, Vol. 4, No. 39 (Nov. 3, 2011).  This article, the first in a two-part series, identifies the two primary types of corruption risks faced by hedge fund managers, summarizes fundamental provisions of the FCPA and highlights key points from a recent program on the current U.S. and global anti-corruption enforcement climate.  The program featured Kimberly A. Parker and Erin G.H. Sloane, both partners at WilmerHale.  The second article will discuss FCPA risks of particular concern to hedge fund managers, as identified by Parker and Sloane, and summarize recent FCPA enforcement actions involving financial institutions. 

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  • From Vol. 8 No.7 (Feb. 19, 2015)

    Private Equity FCPA Enforcement: High Risk or Hype?

    Extraction, engineering, pharmaceuticals and medical device manufacturers – FCPA prosecutors have already swept through these industries.  Are private equity firms next?  In a guest article, Laurence A. Urgenson, Joseph De Simone, Audrey L. Harris, Matthew A. Rossi, Matthew Alexander and Melanie M. Burke, attorneys at Mayer Brown LLP, assert that, using Dodd-Frank and the SEC’s new presence exams, the government may very well turn its attention towards the private equity industry.  They detail the enforcement landscape, the bribery risks for private equity firms (among other things: hiring practices, sovereign wealth funds, acquisitions and joint ventures) and best practices to mitigate those risks.  See also “FCPA Compliance Strategies for Hedge Fund and Private Equity Fund Managers,” The Hedge Fund Law Report, Vol. 7, No. 23 (Jun. 13, 2014).

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  • From Vol. 7 No.23 (Jun. 13, 2014)

    FCPA Compliance Strategies for Hedge Fund and Private Equity Fund Managers

    Given today’s investment environment, with an unabated government focus on the private funds industry and significant investment opportunities in emerging markets, private fund managers are hard-pressed to ignore corruption risks in their businesses.  The Hedge Fund Law Report, The FCPA Report and law firm Molo Lamken recently hosted a panel that addressed hot topics in FCPA enforcement and compliance for the private funds industry.  The panelists, including outside and in-house counsel, discussed, among other things: the current FCPA enforcement climate for hedge fund and private equity fund managers; strategies for mitigating the risk associated with third parties and service providers in high-risk countries; handling facilitation payments; self-reporting violations; and the importance of continuous monitoring of compliance programs.  See “FCPA Considerations for the Private Fund Industry: An Interview with Former Federal Prosecutor Justin Shur,” The Hedge Fund Law Report, Vol. 7, No. 20 (May 23, 2014).

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  • From Vol. 7 No.20 (May 23, 2014)

    FCPA Considerations for the Private Fund Industry: An Interview with Former Federal Prosecutor Justin Shur

    The assets in private funds are growing faster than the number of investment opportunities, especially in discovered markets.  See “OCIE Director Andrew Bowden Describes the Primary Compliance Failings of Private Equity Managers with Respect to Fees, Expenses, Limited Partnership Agreements, Valuation and Marketing,” The Hedge Fund Law Report, Vol. 7, No. 19 (May 16, 2014) (section on “Consolidation and Compression of Returns”).  As a result, private equity and hedge fund managers are looking with increasing receptivity at emerging markets, and, in some cases, frontier markets.  These are the faraway places where big, risky opportunities still live – where information remains asymmetric, access remains elusive and property rights remain in flux.  More often than not, these are also the places that rank low on Transparency International’s Corruption Perceptions Index.  Consequently, the Foreign Corrupt Practices Act – the U.S. statute prohibiting bribery of foreign officials – looms ever larger as private fund managers scour the globe for interesting ideas.  It comes up in fund raising from sovereign wealth funds; in structuring funds and transactions; in retaining finders, brokers, distributors and other third parties; in monitoring investments; in restructurings; in hiring; and in a wide range of other contexts.  See “Practical Considerations for Compliance by Hedge Fund Managers with the FCPA When Evaluating and Engaging Foreign Advisors in Connection with Foreign Bankruptcy Investments,” The Hedge Fund Law Report, Vol. 4, No. 34 (Sep. 29, 2011).  In an effort to assist private fund managers in spotting FCPA-related issues and mitigating FCPA risk, we recently interviewed Justin V. Shur, a former federal prosecutor and now a partner at Molo Lamken LLP.  Our interview covered, among other topics: the relationship between investment control and FCPA risk; contract provisions to limit the FCPA risk raised by third parties; issues presented by deal finders and sovereign wealth funds; hiring risks and best practices; facilitation payments; how to handle an FCPA issue discovered during due diligence; and successor liability.  Shur will expand on these ideas at an event on June 3 at the CORE: Club in Manhattan.  The event is being sponsored by Molo Lamken, The Hedge Fund Law Report and our affiliated publication, The FCPA Report.  In addition to Shur, the event will feature panelists from Indus Capital, Seward & Kissel, Global Environment Fund and the U.S. Securities and Exchange Commission.

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  • From Vol. 6 No.48 (Dec. 19, 2013)

    Expert Panel Underscores Heightened Foreign Corrupt Practice Act Enforcement Risk Facing Hedge Fund and Other Private Fund Managers 

    “Hedge funds are under the FCPA microscope now,” Lauren Resnick, a partner at Baker Hostetler LLP, warned during a recent panel discussion addressing corruption risks that private fund managers, including hedge fund managers, face.  She and her colleague Marc Kornfeld, along with James “Bucky” Canales, Chief Operating Officer of StoneWater Capital LLC, detailed how the FCPA affects the private fund industry and what hedge fund managers and others should be doing to minimize the risk of an FCPA violation, or the violation of another global anti-bribery law.  This article highlights salient points from the panel discussion.  See also “Practical Considerations for Compliance by Hedge Fund Managers with the FCPA When Evaluating and Engaging Foreign Advisors in Connection with Foreign Bankruptcy Investments,” The Hedge Fund Law Report, Vol. 4, No. 34 (Sep. 29, 2011).

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  • From Vol. 6 No.11 (Mar. 14, 2013)

    Proskauer Partner and SEC Enforcement Division Veteran Ronald Wood Explains the Implications for Hedge Fund Managers of Structure and Staffing Changes at the SEC

    In the past few years, the SEC’s Division of Enforcement has refocused its efforts with respect to the investment management industry via structure and staffing.  On the structuring side, the Division of Enforcement has established specialized units, such as the Asset Management Unit, devoted to addressing investor and systemic risks raised by private funds and their managers.  On the staffing side, the Division of Enforcement has hired investment management industry professionals – including hedge fund managers, analysts, operating professionals and due diligence experts – to staff these units.  With this new-found expertise, SEC staff not only “know where the bodies are buried,” but also “understand how they got there,” according to Bruce Karpati, Chief of the Asset Management Unit.  See “OCIE Director Carlo di Florio and Asset Management Unit Chief Bruce Karpati Address Examination and Enforcement Priorities for Hedge Fund Managers,” The Hedge Fund Law Report, Vol. 6, No. 4 (Jan. 24, 2013).  On the foundation of its new expertise, the Division of Enforcement initiated 147 enforcement actions against investment advisers and investment companies in fiscal year 2012.  To provide deeper insight and actionable analysis on what the structuring and staffing changes at the Division of Enforcement mean for hedge fund managers, The Hedge Fund Law Report recently interviewed Ronald Wood.  Wood is a partner in the Securities Litigation Group at Proskauer Rose LLP, and prior to Proskauer spent a decade in the Division of Enforcement.  Our interview covered topics including SEC enforcement priorities; the use of reports filed with the SEC to identify enforcement targets; the SEC’s aberrational performance initiative; insider trading best practices; paid access to corporate executives; track record portability; due diligence on Chinese companies; pay to play issues; “big boy” letters; and FCPA concerns for hedge fund managers.  This article contains the transcript of our interview with Wood.  This interview was conducted in connection with the Regulatory Compliance Association’s upcoming Regulation, Operations & Compliance 2013 Symposium, to be held at the Pierre Hotel in New York City on April 18, 2013.  That Symposium is scheduled to include a panel entitled “Post SAC Capital – Investigation, Enforcement & Prosecution of Hedge & PE Managers.”  For a fuller description of the Symposium, click here.  To register for the Symposium, click here.  Subscribers to The Hedge Fund Law Report are eligible for a registration discount.

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  • From Vol. 6 No.2 (Jan. 10, 2013)

    How Private Fund Managers Can Manage FCPA Risks When Investing in Emerging Markets

    Anti-corruption enforcement efforts have dramatically increased over the last few years.  Every day it seems there is a new headline about an investigation involving alleged violations of the FCPA.  Federal authorities have indicated that their FCPA enforcement efforts are increasingly focused on the financial services industry and, in particular, private fund managers that invest in emerging markets.  Given this heightened level of government scrutiny, it is important that private equity firms, hedge fund managers and other investors that conduct business in foreign markets understand the associated FCPA risks.  Such risks can arise in the context of raising funds overseas, working with joint venture partners and third party agents, and investing in companies that operate in countries known for corruption.  A potential misstep in these areas can result in a fund manager and its employees facing significant civil penalties and possible criminal prosecution or, at a minimum, having to respond to government subpoenas or requests for information in connection with an investigation by federal authorities, thus resulting in the unnecessary expenditure of time and money and the attraction of unwanted attention.  In a guest article, Justin V. Shur and Joel M. Melendez, partner and associate, respectively, at Molo Lamken LLP, consider some of the important and recurring FCPA risks that arise for investors in emerging markets, and offer practical guidance to help private fund managers and their employees avoid or minimize liability in this area.

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  • From Vol. 5 No.19 (May 10, 2012)

    Civil and Criminal Enforcement Actions Against Former Morgan Stanley Employee Highlight the Relevance of the FCPA for Private Fund Managers

    Hedge fund managers are often concerned about the potential for firm liability where rogue employees violate securities and other laws.  Recent parallel civil and criminal actions initiated by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) charging a rogue employee of a private fund adviser with violating the anti-bribery and internal controls provisions of the Foreign Corrupt Practices Act of 1977 (FCPA) and the Investment Advisers Act of 1940 demonstrate that a firm that has taken measures to adopt robust internal controls and other measures designed to prevent FCPA violations can avoid liability for the actions of rogue employees.  This article summarizes the parallel SEC and DOJ actions; the terms of the rogue employee’s settlement with the SEC; and the types of measures a company can implement to avoid liability for FCPA violations by a rogue employee.  See also “Practical Considerations for Compliance by Hedge Fund Managers with the FCPA When Evaluating and Engaging Foreign Advisors in Connection with Foreign Bankruptcy Investments,” The Hedge Fund Law Report, Vol. 4, No. 34 (Sep. 29, 2011).

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  • From Vol. 4 No.39 (Nov. 3, 2011)

    Anti-Bribery Compliance for Private Fund Managers

    Managing the risks inherent in dealing with foreign officials should be a top priority for managers of hedge funds and private equity funds.  This is especially true in the current climate of expansive government interpretations of anti-bribery laws, new incentives for whistleblowers and the recent government scrutiny of the inner workings of fund managers.  It has become standard fare for fund managers to have regular interactions with foreign officials or their representatives in the ordinary course of raising capital and making investments.  There is nothing inherently wrong with such interactions.  Still, those dealings need to be informed by a heightened sensitivity to the possible appearance that something of value was given to a foreign official in connection with a particular investment or transaction.  The risk is that, regardless of the intent of the fund manager, certain conduct may be viewed in hindsight as an effort to improperly influence the actions of a foreign official.  As a result, a fund manager needs to focus on more than just the substance of the transaction and needs to consider both how the transaction might be perceived and the record that is being created.  As cross-border investments continue apace, fund managers can protect themselves by having adequate policies and procedures in place to identify potential bribery risks and to prevent violations from occurring.  Aggressive enforcement of the Foreign Corrupt Practices Act (FCPA) by U.S. authorities and the comprehensive overhaul of anti-corruption laws in the U.K., culminating in the new Bribery Act 2010 (Bribery Act), highlight the importance of implementing effective anti-corruption compliance policies and procedures.  In these circumstances, fund managers must do more than assure themselves that they are not acting with a corrupt intent; they also need to be alert to the risk of misunderstandings and to be diligent in creating a record of compliance.  In a guest article, Paul A. Leder and Sarah P. Swanz, partner and counsel, respectively, in the Washington D.C. office of Richards Kibbe & Orbe LLP, outline steps to take to identify and manage the compliance risks faced by fund managers both directly (through their own dealings with foreign officials) and indirectly (through investments in operating companies that operate overseas).  Specifically, Leder and Swanz identify conduct at the fund manager level that can put the manager at risk; discuss the importance of strong internal controls and compliance programs to mitigate corruption risks; and highlight categories of conduct at the portfolio company level that can put the manager at risk.  The authors then make specific suggestions for identifying potential bribery risks and managing such risks.  They conclude with a case study of a criminal prosecution that demonstrates the potential exposure for managers when making foreign investments.

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  • From Vol. 4 No.34 (Sep. 29, 2011)

    Practical Considerations for Compliance by Hedge Fund Managers with the FCPA When Evaluating and Engaging Foreign Advisors in Connection with Foreign Bankruptcy Investments

    In many emerging and opening markets, the level of apparent regulation can sometimes provide a false patina of order.  In practice, local laws and regulations are often a byzantine maze of stamps, taxes, rules, forms and other bureaucratic processes that present enormous hurdles to investing and operating in such markets.  Investments in distressed assets present special risks because nearly every stage of the investment involves interactions with foreign government officials of one stripe or another, from members of the local judiciary, to financial and securities regulators, to central government banks.  In such an environment, it is understandable that hedge fund managers turn to a variety of advisors and agents for guidance and assistance in navigating the local landscape.  However, the use of third party agents and intermediaries in foreign investments presents distinct risks under the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits the payment of bribes to foreign government officials to obtain or retain business or a business advantage.  In particular, as U.S. hedge fund managers look to execute investment strategies in emerging markets, they must be aware of (and act in accordance with) the FCPA.  Not only does the law criminalize corrupt payments made directly to an official, it also prohibits the use of a third party agent or intermediary (regardless of the nationality or location of the agent or intermediary) to “knowingly” make such prohibited payments on behalf of a principal.  As a result, hedge funds that rely on third-party agents to assist and guide investments in foreign insolvency proceedings face a legal risk if such agents engage in corrupt activities in order to advance the business or investment interests of the fund.  In a guest article, Matthew T. Reinhard, a Member of Miller & Chevalier, Chartered, first provides a brief overview of the FCPA and how it relates to the use of third parties.  Next, Reinhard discusses practical steps hedge fund managers can take to vet their agents and protect themselves, their funds and their investors from engaging unscrupulous agents.  Finally, Reinhard discusses specific provisions hedge fund managers should include in their agreements with third parties and other steps that can be taken to guard against liability for corrupt acts by such agents.

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  • From Vol. 4 No.33 (Sep. 22, 2011)

    Wiretaps, Whistleblowers, Expert Networks and Insider Trading: A Conversation with Kevin O’Connor, Former Associate Attorney General of the U.S. and Former U.S. Attorney for Connecticut

    Hedge fund managers remain a prime target for civil and criminal insider trading charges.  This is so for at least five reasons.  First, regulators and prosecutors have been emboldened by the May 11, 2011 conviction of Galleon Group founder Raj Rajaratnam on 14 counts of conspiracy and securities fraud.  See “Implications of the Rajaratnam Verdict for the ‘Mosaic Theory,’ the ‘Knowing Possession’ Standard of Insider Trading and Criminal Wire Fraud Liability in the Absence of a Trade,” The Hedge Fund Law Report, Vol. 4, No. 18 (Jun. 1, 2011).  Second, wiretapping has become a viable tool for investigating insider trading by hedge fund manager personnel, and a source of persuasive evidence.  See “Will a Criminal Court Admit into Evidence a Recorded Telephone Conversation Between a Hedge Fund Manager Charged with Insider Trading and an Alleged Co-Conspirator?,” The Hedge Fund Law Report, Vol. 4, No. 24 (Jul. 14, 2011).  Third, in the course of examinations of hedge fund managers, SEC examination personnel are looking for (among other things) evidence of insider trading that can serve as the basis of referrals to the SEC’s Enforcement Division.  See “Are Hedge Fund Managers Required to Disclose the Existence or Outcome of Regulatory Examinations to Current or Potential Investors?,” The Hedge Fund Law Report, Vol. 4, No. 32 (Sep. 16, 2011).  Fourth, the staff of the SEC’s Enforcement Division can now use tools developed in the criminal context in bringing, negotiating and settling insider trading charges against hedge fund managers.  See “Entry by SEC into a Non-Prosecution Agreement with Clothing Marketer Illustrates How Hedge Fund Managers May Survive Discovery of Certain Insider Trading Violations,” The Hedge Fund Law Report, Vol. 3, No. 50 (Dec. 29, 2010).  And fifth, budgetary constraints have led the SEC to place a higher priority on deterrence, and insider trading actions against hedge fund managers are thought to have a powerful deterrent effect.  See “Key Insights for Registered Hedge Fund Managers from the SEC’s Recently Released Study on Investment Adviser Examinations,” The Hedge Fund Law Report, Vol. 4, No. 5 (Feb. 10, 2011).  In light of the vigor with which civil and criminal authorities are pursuing insider trading actions – and the ongoing susceptibility of hedge fund managers to insider trading charges – the Regulatory Compliance Association’s Fall 2011 Asset Management Thought Leadership Symposium will feature a session entitled “Insider Trading – The New Enforcement Paradigm.”  That RCA Symposium will take place on November 10, 2011 at the Pierre Hotel in New York.  (For a fuller description of the Symposium, click here.  To register for the Symposium, click here.  Subscribers to The Hedge Fund Law Report are eligible for a registration discount.)  One of the speaking faculty members expected to participate in the insider trading session is Kevin J. O’Connor.  O’Connor is a Partner at Bracewell & Giuliani and Chair of the firm’s White Collar Practice Group.  Previously, O’Connor was Associate Attorney General of the United States, the third-ranking official at the U.S. Department of Justice, and United States Attorney for Connecticut.  In anticipation of the upcoming RCA Symposium, The Hedge Fund Law Report interviewed O’Connor regarding insider trading considerations for hedge fund managers and related topics.  Specifically, our interview covered: implications for hedge fund managers of the increased use of wiretap evidence in insider trading investigations; the use of criminal wiretaps in civil proceedings; wiretaps of mobile phones and Voice over Internet Protocol lines; “tapping” of Blackberries and social media; how to incentivize internal reporting under the new SEC whistleblower rule; whether hedge fund service providers can be whistleblowers; activities other than insider trading that may serve as the basis of a whistleblower complaint; best compliance practices for engaging expert network firms; compliance training with respect to the use of expert networks; due diligence on expert network firms; and how to avoid FCPA violations when engaging third-party placement agents to solicit investments from sovereign wealth funds.  The full text of our interview with O’Connor is included in this issue of The Hedge Fund Law Report.

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  • From Vol. 4 No.4 (Feb. 3, 2011)

    The SEC’s Investigation of FCPA Violations and Sovereign Wealth Funds – Implications for Hedge Funds

    Although the Securities and Exchange Commission has said little publicly about its recent inquiry into potential Foreign Corrupt Practices Act (FCPA) violations involving the financial services industry and sovereign wealth funds, this sweep – which began earlier this month – has critical implications for U.S. private equity and hedge funds.  In a guest article, Michael J. Gilbert and Joshua W.B. Richards, Partner and Associate, respectively, at Dechert LLP, detail the background of the SEC’s investigation; outline the relevant provisions of the FCPA; provide examples of scenarios in which hedge funds may be exposed to FCPA risks; and offer guidance on how to mitigate those risks.

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