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Investment Management

Kaye Scholer's Investment Management Group serves the needs of a global investment management industry by providing a full range of legal services to a diverse group of international clients. We focus on the organization, fund raising, compliance and administration of investment funds, as well as on the structuring, operation, purchase, sale and financing of investment managers and advisers. MORE

Overview

The group helps structure and document a variety of pooled investment vehicles. We advise on structuring and registration matters for US, UK and European funds and their advisers. We also advise on a wide range of compliance and exemptive issues, including discussions with the SEC, the FSA and other regulators.

The Investment Management Group includes the following focus areas:

Private Equity Funds - Representing sponsors and managers of and investors in private equity funds and funds of funds, venture capital funds, distressed asset funds, leveraged buyout funds and real estate funds.

Hedge Funds - Advising clients in all aspects of the structuring, offering and ongoing operations of hedge funds, funds of hedge funds and related products, as well as in the structuring and negotiation of derivatives.

Ownership and Compensation Arrangements - Structuring investment management and advisory firms and advising them in the structuring and day-to-day operation of their businesses.

Compliance - Creating compliance programs, reviewing existing procedures and assisting clients in examinations and inquiries by securities and financial regulators.

We have worked on many collective investment vehicles for a variety of markets, taking into account the tax and regulatory implications of attracting investors from the United States, Asia, Latin America, the Middle East and Europe, and making tax-efficient investments in many different countries.

The Investment Management Group follows a multi-disciplinary approach to its representations, an important element in the comprehensive services we provide to our clients. We work closely with attorneys in the firm's tax, benefits and compensation, and trust and estates practices, as well as mergers and acquisitions, restructuring, financing and capital markets practices. In addition, many attorneys in our litigation department have substantial experience in representing investment managers and advisers, broker-dealers and other service provider clients.

Private Equity Funds

We advise sponsors and placement agents in structuring and marketing private equity funds. Our practice includes buyout funds, venture capital funds, special situations funds, emerging market funds and real estate funds, including a variety of both onshore and offshore structures. Our representation of both general partners and limited partners on an international basis provides us with a unique understanding of private equity funds.

We represent the sponsors of a number of well-known private equity funds. We work with general partners to anticipate and address the regulatory and economic needs of investors. We work closely with our private equity transactional lawyers to assist funds as they seek to build value in their portfolio companies.

Our cross-border tax lawyers are experienced in the partnership tax and allocation rules that are used in creating and drafting private equity fund documents and tax-efficient arrangements for their principals, including dealing with unrelated business taxable income rules, passive foreign investment company rules, controlled foreign corporation rules and the US taxation of non-US investors.

In addition, our employee benefits lawyers advise on compliance with fiduciary responsibilities under ERISA, avoiding prohibited transactions, and qualifying for regulatory exemptions. We also provide counsel on the investment of ERISA "plan assets" and the requirements of the venture capital operating company and real estate operating company exceptions to the plan asset regulation.

As part of our work with limited partners, we represent institutional investors in establishing investment vehicles dedicated to allocating capital on a co-investment basis.

We have represented sponsors in organizing funds of funds that include investments in buyout funds, venture capital funds and distressed debt funds. We also assist in the review of the documentation relating to a fund's commitments to underlying investment funds.

Private equity funds and hedge funds have begun to converge in their investment objectives, structures and terms. We represent funds which have pioneered this convergence. We are familiar with both the forces behind this convergence, as well as the structural, tax, ERISA and regulatory requirements that lead to their success.

Hedge Funds

We represent sponsors, investors and placement agents in connection with the structuring and operation of onshore and offshore hedge funds, funds of funds, and principal-protected funds.

We work closely with our clients to develop structures that optimize investment and operational flexibility. We represent hedge funds and funds of funds with widely different strategies, including hedge funds of funds, long/short equity, global fixed income, distressed debt, industry sectors such as health care and energy, and special geographic sectors.

Establishing and launching a new hedge fund requires the drafting of organizational documents, offering memoranda, operating agreements, advisory agreements, administration agreements, subscription agreements, placement agreements, side letters, registration forms and compliance manuals, together with the review of sales materials and advice and filings under federal and state securities laws, commodities laws, international securities laws and tax laws.

Once a hedge fund has launched, we provide ongoing counsel regarding a variety of issues that may arise including those related to large trader reporting requirements, conflicts of interest, derivatives, spin-offs and employment. We also counsel clients on questions relating to inside information, market abuse and short sale questions.

We provide ongoing assistance with trading and investment documentation, including:

  • financing agreements providing for daily operations and redemptions;
  • credit derivatives to obtain protection on specific assets;
  • equity derivatives to facilitate leveraged synthetic exposure to securities; and
  • total return swaps.

Ownership and Compensation Arrangements

The expanding market for investment funds includes numerous opportunities for strategic investment and consolidation. We represent investment managers and advisers in mergers and acquisitions, joint ventures, financings and related corporate transactions. We are familiar with the wide variety of financial, structural, tax, cross-border and regulatory issues that these transactions present.
We work closely with the firm's tax, executive compensation and estate planning attorneys to assist clients in designing and implementing incentive compensation and equity ownership arrangements for principals of investment managers and advisers, both in connection with our mergers and acquisitions work in this dynamic industry and our work for fund sponsors generally.

Compliance

Compliance and awareness of impending regulatory changes are critical to our clients' success.

Accordingly, we advise our clients on the full spectrum of regulatory issues, including:

  • United States - Securities Act, the Investment Company Act, the Investment Advisers Act and the Commodities Exchange Act;
  • United Kingdom - Financial Services and Markets Act 2000;
  • Germany - Investment Act and Investment Tax Act; and
  • Europe - Markets in Financial Instruments Directive and Capital Requirements Directive.

We conduct comprehensive reviews of investment management and advisory firms, reviewing all aspects of a client's business. These reviews are tailored to the specific needs of each client, in order to help them improve their procedures in the areas of insider trading, personal investments, inter-fund transfer and allocation practices, ethical wall procedures, and books and records requirements. Our compliance work also takes the form of due diligence reviews of investment management and advisory firms that are candidates for acquisition.

We work actively with various regulators around the world to reduce unnecessary regulation and generally streamline the regulatory process. We routinely submit comments on SEC, FSA and EU consultation and rule-making processes to promote simpler regulation of investment funds and their advisers.

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