The Hedge Fund Law Report

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

Articles By Topic

By Topic: Sunshine Laws

  • From Vol. 10 No.13 (Mar. 30, 2017)

    K&L Gates Program Warns of Public Disclosure Risks Associated With Accepting State Public Pensions As Investors and Advises on How to Mitigate Them (Part Two of Two)

    Many private fund advisers perceive the investments from public pension plans as highly desirable, particularly in a difficult fundraising environment. See “How Emerging Hedge Fund Managers Can Raise Capital in a Challenging Market Without Overstepping Legal Bounds” (Aug. 4, 2016). While the benefits are plentiful, it is important for fund managers to be mindful of federal, state and local regulations surrounding these arrangements. Failure to do so could lead to potential violations of statutory “pay to play” rules, as well as the inadvertent disclosure of proprietary fund information under public record requests and freedom of information (FOI) laws. To apprise fund managers of these issues and help them prepare accordingly, K&L Gates presented a recent program featuring insights from Eric J. Smith, managing director and deputy general counsel at PineBridge Investments, as well as Cary J. Meer and Ruth E. Delaney, partner and associate, respectively, at K&L Gates. This second article in a two-part series covers FOI laws pursuant to which funds could face disclosure issues, as well as ways to protect that information. The first article detailed federal and state pay to play regulations, including restrictions on political contributions and gifts and entertainment. For more on how fund managers can comply with pay to play restrictions, see “The SEC’s Pay to Play Rule Is Here to Stay: Tips for Hedge Fund Managers to Avoid Liability” (Oct. 8, 2015); “Four Pay to Play Traps for Hedge Fund Managers, and How to Avoid Them” (Feb. 5, 2015); and “How Can Hedge Fund Managers Participate in the Political Process Without Violating Pay to Play Regulations at the Federal, State, Municipal or Fund Level?” (Oct. 6, 2011).

    Read Full Article …
  • From Vol. 5 No.18 (May 3, 2012)

    Ten Strategies for Preventing Disclosure of Confidential Hedge Fund Data under State Sunshine Laws

    Public pension funds are among the most coveted types of investors in hedge funds.  This is so for various reasons.  Public pension funds typically make large investments for the long term.  They often spend considerable time on investment and operational due diligence and only commit capital after scrupulous analysis.  Accordingly, an investment from a credible public pension fund is often more than just a source of capital – it also acts as an imprimatur, a vote of confidence and a letter of recommendation when approaching other investors.  But for hedge fund managers, investments from public pension funds can also have downsides.  One of the more notable downsides is the one-two punch of more information demanded and less control over information provided.  That is, public pension funds often demand from their hedge fund managers – and often receive as a result of their size and concomitant clout – significant transparency into things like portfolio composition, industry concentration, regulatory developments and similar items.  At the same time, public pension funds are typically subject to state “sunshine” laws – laws that generally require government bodies to disclose information about their business and investment activities unless an exemption is available.  For hedge fund managers that want public pension plan investors but do not want to disclose their confidential data, the existence of state sunshine laws would appear to present an unpleasant binary choice: accept pension money (if you can get it) and disclose, or reject pension money and maintain confidentiality.  But the choice need not be so stark.  There are ways to accept public pension plan investors while protecting the confidentiality of competitively sensitive information to a significant degree.  This article outlines ten strategies for doing so and, to contextualize those strategies, discusses: what sunshine laws are; the information typically required to be disclosed pursuant to sunshine laws; some common exemptions from disclosure included in sunshine laws; and the process for challenging a request for disclosure pursuant to sunshine laws.

    Read Full Article …