Articles By Topic
By Topic: Attorney-Client Privilege
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From Vol. 6 No.3 (Jan. 17, 2013)
Six Recommendations for Hedge Fund Managers Seeking to Protect Themselves from Waiver of Attorney-Client Privilege When Faced With SEC Document Requests
Receipt of subpoenas from the SEC can rattle even the most time-tested hedge fund managers, particularly where there is little time to respond. The pressures created by an SEC investigation or enforcement action can lead to inadvertent disclosures of information or mistakes in judgment, which can result in a manager’s waiver of attorney-client privilege and other severe consequences. See generally “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). A recent federal court decision illustrates these risks. In that decision, the court held that a mutual fund adviser and another defendant waived their attorney-client privilege with respect to information inadvertently disclosed to the SEC in the course of an investigation and subsequent enforcement action. The court also ruled on whether the defendants made a broader subject matter waiver of the attorney-client privilege (with respect to yet-undisclosed information) in disclosing information to bolster affirmative defenses (based on the reliance of counsel and other professionals) in the course of the enforcement action. Although the case involves an adviser to a mutual fund, the risks, remedies and principles are equally applicable to hedge fund managers. This article summarizes the factual background in this case as well as the court’s ruling on the SEC’s motion to confirm that the defendants waived attorney-client privilege with respect to their actions. The article also outlines six recommendations for hedge fund managers seeking to preserve the attorney-client privilege when faced with SEC document requests.
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From Vol. 4 No.28 (Aug. 19, 2011)
U.S. District Court Rules on Whether Attorney Interview Notes and Summaries Produced in Connection with Hedge Fund Manager D.B. Zwirn’s Internal Investigation of Financial Irregularities Are Protected from Disclosure by Attorney-Client Privilege
In early 2006, now-defunct hedge fund managers D.B. Zwirn & Co., L.P. and D.B. Zwirn Partners, LLC (Zwirn) learned of certain financial irregularities in their operations, including unauthorized early payment of management fees and the purchase of a Gulfstream jet for use by their founder and principal, Daniel B. Zwirn. See “Ten Steps That Hedge Fund Managers Can Take to Avoid Improper Transfers among Funds and Accounts,” The Hedge Fund Law Report, Vol. 4, No. 13 (April 21, 2011). The Zwirn companies retained the services of three different law firms – Schulte, Roth & Zabel, LLP (SRZ); Gibson, Dunn & Crutcher, LLP (GDC); and Fried, Frank, Harris, Shriver & Jacobson LLP – to investigate the irregularities and defend any legal actions arising from them. The investigations placed blame on plaintiff Perry A. Gruss (Gruss), who was Chief Financial Officer and a partner of certain Zwirn entities. Gruss resigned. Zwirn then communicated its attorneys’ findings to its investors and to the Securities and Exchange Commission (SEC). In response, Gruss sued Zwirn for defamation in U.S. District Court. During discovery, Gruss moved to compel disclosure of the interview notes and summaries prepared by SRZ and GDC attorneys in the course of their investigations. This article discusses the District Court’s ruling on Gruss’ motion, as well as the Court’s analysis of the attorney-client privilege and the related work product doctrine in the hedge fund context. For a summary of Gruss’ complaint, see “Former CFO of Highbridge/Zwirn Special Opportunity Fund Sues Ex-Partner Daniel B. Zwirn for Defamation and Breach of Contract,” The Hedge Fund Law Report, Vol. 2, No. 30 (July 29, 2009).
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