The Hedge Fund Law Report

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

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By Topic: Hedge Fund Vendor Agreements

  • From Vol. 9 No.39 (Oct. 6, 2016)

    How Hedge Fund Managers Can Protect Trade Secrets by Providing DTSA-Compliant Notice 

    To many hedge fund managers, there is little more important than protecting the fund’s trade secrets – whether they are trading models, track records, client lists or trading positions – from wrongful disclosure. On May 11, 2016, hedge fund managers were given a powerful new tool to protect this proprietary information when President Obama signed into law the Defend Trade Secrets Act of 2016 (DTSA). See “DTSA Provides Hedge Fund Managers With Protection for Proprietary Trading Technology and Other Trade Secrets” (Jun. 23, 2016). In a guest article, David I. Greenberger, partner at Bailey Duquette P.C., describes how hedge funds can take full advantage of the protections and remedies the DTSA affords – including the right to recover punitive damages and reasonable attorney’s fees – by complying with its requirements to provide certain notices to their employees, consultants and contractors. Additionally, Greenberger suggests that hedge fund managers take immediate steps to ensure that any agreements they enter into with such individuals related to trade secret usage are in writing and contain the requisite notices. Finally, he describes how managers should modify operative agreements that existed prior to the enactment of the DTSA to include the necessary immunity notice provisions. For more on protecting trade secrets, see “Procedures for Hedge Fund Managers to Safeguard Trade Secrets From Rogue Employees” (Jul. 21, 2016); and “How Can Hedge Fund Managers Protect Themselves Against Trade Secrets Claims?” (May 16, 2014).

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  • From Vol. 9 No.5 (Feb. 4, 2016)

    Essential Tools for Hedge Fund Managers to Combat Escalating Cyber Threats

    Cybersecurity breaches can cause untold financial and reputational damage, spawn private litigation and draw adverse regulatory scrutiny. A recent webinar sponsored by Backstop Solutions Group reviewed the evolving cyber threat landscape and related regulatory environment, and suggested tools to mitigate vendor risks and ensure appropriate cybersecurity governance and employee training. The program, “Cybersecurity – Protecting Investor Data,” was moderated by Chris DeNigris, a Backstop manager. It featured Kevin Holl, vice president at Evanston Capital Management; Natasha G. Kohne, a partner at Akin Gump; and Michael Neuman, a Backstop vice president. This article summarizes the primary takeaways from the discussion. See “How Hedge Fund Managers Can Meet the Cybersecurity Challenge: A Snapshot of the Regulatory Landscape (Part One of Two)” (Dec. 3, 2015); and “Benchmarking and Best Practices for Hedge Fund Manager Cybersecurity” (Feb. 5, 2015).

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  • From Vol. 4 No.26 (Aug. 4, 2011)

    Hedge Fund-Specific Issues in Portfolio Management Software Agreements and Other Vendor Agreements

    Hedge fund managers require various third party vendor-provided products and services to manage their daily operations.  Typical agreements entered into by hedge fund managers for such products and services include trading system agreements, license agreements for investment analysis tools, risk management and portfolio valuation software, market data license agreements, software development agreements, hardware purchase agreements, website design agreements, consulting agreements and administration agreements.  All vendor agreements cover a common set of issues, including vendor performance obligations, indemnification and limitations on liability.  In addition to these common issues, vendor agreements entered into by hedge fund managers contain a few distinctive issues arising from the unique structure and the private nature of hedge fund groups.  In a guest article, Robert R. Kiesel, a Partner at Schulte Roth & Zabel LLP and chair of the firm’s Intellectual Property, Sourcing & Technology Group, and David L. Cummings, an Associate in Schulte’s Intellectual Property, Sourcing & Technology Group, discuss: selection of vendors and vendor breach; hedge fund structuring as it relates to vendor agreements; party selection; IT agreement standard scope restrictions; liability for trades; use of output and results; issues related to hedge fund secrecy; confidentiality; in-house systems versus third-party systems; privacy; arbitration; and publicity.

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