Recent Issue Headlines
Vol. 1, No. 8 (Apr. 22, 2008) Print This Issue
- New, more concise requirements expected in upcoming months to replace last year’s highly criticized SEC NY Regional formal examination letter requirements.
- Revised requirements to be narrowed to include disclosure of client assets under management, risk management and internal controls.
- Compliance officers urged to integrate new SEC requirements into policies, procedures and practices.
Federal Court Holds that Trader’s Role as Hedge Fund Manager Does Not, by Itself, Create Fiduciary Duty to Fund's Investors
- Hedge fund trader’s motion to dismiss manager’s breach of fiduciary duty claim denied, since state law requires that parties to a joint venture owe one another such a duty, and allegations that trader recklessly acted to shut the fund down would constitute a breach of such duty.
- Trader’s motion to dismiss manager’s breach of contract claim also denied, since complaint adequately alleged that trader caused two unsatisfied “day trade calls” that remained unsatisfied during the relevant period.
- Investor’s claim that trader breached fiduciary duty dismissed because investor failed to show he placed his “trust and confidence” in trader.
- Investor’s claim that trader tortiously interfered with contract dismissed for failure to allege that trader intended to harm investor.
Director of SEC Office of International Affairs Testifies Before Senate Committee on the Regulatory Framework for Sovereign Investments
- Ethiopis Tafara, Director of SEC Office of International Affairs, testified before the Senate Committee on Banking, Housing and Urban Affairs regarding regulatory concerns raised by sovereign wealth funds and sovereign business ownership.
- Specifically, Tafara discussed six regulatory concerns arising out of sovereign wealth fund investment and sovereign business ownership: market efficiency, transparency, enforcement, information disparity and corruption. In addition, he briefly described recent efforts to create best practices for sovereign funds.
Federal Appeals Court Holds that Hedge Fund Adviser did not Waive its Right to Compel Arbitration by Pursuing State Litigation against Former Analyst
- Court of appeals vacated and remanded district court’s finding that arbitration clause in hedge fund employment agreement (for employee who developed proprietary stock trading model) was unconscionable under state law.
- District court’s conclusion that the employer waived its right to compel arbitration was based solely on the fact that employer pursued state court litigation; district court failed to discuss whether the employee was prejudiced by that litigation and the litigation itself was insufficient to determine prejudice.