Tag Archives: hedge fund attorney

Secondary Hedge Fund Market

Company Promotes Secondary Hedge Fund Trading

Some hedge funds, for a number of potential reasons, are closed for further investment by outside investors. In these cases outside investors can try to get into the funds organically or they can enter the fund through the secondary hedge fund market. In the secondary market, interests in a hedge fund are sold by withdrawing investors to investors who want to get into the fund. There are many reasons why an investor would choose to sell through the secondary market instead of simply redeeming. The most obvious is that the investor needs immediate liquidity. While there is a small secondary market in hedge fund interests, it is not always easy to find investors wishing to sell on the secondary market. Continue reading →

Revising Hedge Fund Offering Documents

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It is very important that hedge fund managers always provide potential investors with hedge fund offering documents which are current and up to date.* Because of certain changes to the various hedge fund laws within the past few months (and because of the increased likelihood of future rules/regulations changes) a hedge fund private placement memorandum which was current 3 months ago will likely need to be revised.

*As always, hedge fund offering documents should only be drafted by a knowledgeable hedge fund attorney.

Specifically, there are two changes which will need to be implemented immediately – the change of the new issue rule (applicable to most funds) and the abolition of Section 409 (applicable to a small number of hedge funds). This article will detail the changes that will need to be made and will discuss how your hedge fund attorney will go about this. Continue reading →

Madoff Whistleblower

Hedge Fund Taxation – Law School Professor Perspective

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Overview of Hedge Fund Taxation

The following is a reprint of the Joseph Bankman’s testimony before Congress. Mr. Bankman is a professor at Stanford Law School. While the testimony has a bias against the current hedge fund taxation structure, it provides a great overview of hedge fund tax issue, specifically the taxation of the hedge fund performance fee (also known as a “performance allocation,” “carried interest” or “carry”). Ultimately the future of the hedge fund taxation regime will be decided in the political arena, but this article provides a good overview of the arguments for changing the current tax code. Continue reading →

Hedge Fund Comments/ Questions and Answers

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Questions and discussions from Hedge Fund Law Blog readers

I get quite a few questions from readers and usually I am able to answer these questions via email within a couple of days. If you have any questions, comments or simply want more information on starting a hedge fund, please feel free to contact us. We also will take requests for blog posts on certain issues and we also will publish articles (with all appropriate recognition and links) by guest authors. [Note: any grammatical errors in the original messages have not been corrected.] Continue reading →

Hedge Fund Disclaimer

North Carolina Hedge Fund Law

Can a hedge fund value its own assets?

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Hedge Fund Questions

For the new year we will publish a list of common questions we receive from our readers. This question involves hedge fund valuation.

Question: Can a hedge fund provide its own valuation?

Answer: Generally yes, provided that the hedge fund offering documents state that the valuation of the hedge fund’s assets will be conducted by the fund – more specifically by the hedge fund’s management company. In many hedge fund documents a provision which allows a manager flexibility in valuation is standard – although, it is likely that these normally nebulous provisions will become more specific as institutional investors require greater specificity in the offering documents. Continue reading →

Starting a Hedge Fund – Primer for Start Up Hedge Fund Managers

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How to Start a Hedge Fund

Many future hedge fund managers have misconceptions about how to start a hedge fund – either they think it is a very basic process that takes no time or resources, or they think that it will take too much time and will be cost prohibitive. For most start up hedge funds, the manager can be up and running within a month depending on whether the manager will need to be registered with the state securities commission (please see our article on start up hedge fund timelines). This article will detail the steps the manager will need to take to start the hedge fund. Continue reading →

Offshore Hedge Funds – Side by Side Hedge Fund Structure

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Offshore hedge funds can be structured in a number of different ways including a stand alone structure, a master-feeder structure and a side by side structure. This article discusses the side by side hedge fund structure and also provides a side by side offshore hedge fund organizational chart. As we have noted earlier in an article regarding offshore hedge fund structural considerations, a side by side offshore hedge fund is a structure consisting of two distinct entities which are managed in the same way by a single management company.

I attached the following Offshore Side by Side Hedge Fund Organizational Chart so that hedge fund managers can get an idea of the structures involved and the flow of payments. This specific chart details (1) a management fee and a performance allocation paid from the domestic counterpart and (2) a management fee and a performance fee paid from the offshore counterpart. Offshore hedge fund managers should discuss these aspects of their offshore hedge funds with their attorneys. Continue reading →