Monthly Archives: November 2008

SEC Brings Action Against Unregistered Owner of Broker-Dealer

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The SEC recently brought an action against the principal of a broker dealer for not being registered as a principal.  There are many instances where members of the investment management are operating without having the proper registrations or licenses and many times these people think that they can remain under the radar as long as they aren’t acting fraudulently.  In this instance the principal was not able to remain under the radar. Continue reading →

New Hedge Fund Regulation – Grassley Renews Efforts to Register Hedge Funds

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The race has begun.  Members of the Congress and the Senate will be jockeying for position in the new race toward hedge fund regulation.  Senator Grassley announced today that he will be reintroducing a bill to require hedge fund managers to register as investment advisors with the SEC.  The text of the full release can be found below. Continue reading →

Hedge Funds Regulation – Survey Indicates More Regulation Expected

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The following is a press release from Rothstein Kass.

HEDGE FUND MANAGERS ANTICIPATE INCREASED REGULATION UNDER NEW PRESIDENTIAL ADMINISTRATION ACCORDING TO NEW SURVEY FROM CPA FIRM ROTHSTEIN KASS

Majority of Senior Partners at U.S. Firms Expect Rising Compliance Costs Will Make Hedge Funds More Costly to Operate Continue reading →

Life Settlement Hedge Funds – Structural Considerations

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Because life settlements are a unique investment which has characteristics not associated with other types of investments creative managers can choose to structure a life settlement hedge fund in many different ways.  This article will detail (i) the potential life settlement hedge fund structures, (ii) life settlement investment program considerations, and (iii) a brief overview of life settlement taxation issues.  Continue reading →

Overview of the Securities Act of 1933

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The Securities Act of 1933 (the “Securities Act”) is the cornerstone to the regulation of securities in the United States. The most important feature of the act is the requirement that all securities be registered or fall within an exemption from registration.  This overview will detail the important provisions of the Securities Act. Continue reading →

CPOs and CTAs have Until November 30 to update Disclosure Documents if they trade Forex

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As we announced earlier, the NFA promulgated rules which were approved by the CFTC which gave the NFA jurisdiction over retail off-exchange foreign exchange trading by its member firms.  What this essentially means is that if:

(i) you are currently a NFA member (e.g. you have a commodity/ futures pool or direct commodity/ futures accounts) and

(ii) you trade forex in the pool or account, or have an outside pool or account devoted to forex trading,

then you will need to update your disclosure documents with the NFA. The disclosure documents will need to contain all of the information required for non-forex disclosure documents and the update must be completed by November 30.  Please see NFA to Begin Regulating Forex. Continue reading →

Life Settlement Hedge Funds – Are Life Settlements Securities?

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Many life settlement hedge fund managers which establish life settlement hedge funds come from the insurance industry (although we have dealt with managers who are also registered as investment advisors).  Accordingly, many managers are surprised when we discuss the issue of potential investment advisory registration.  The central question is whether life settlements are securities.  Continue reading →

CFTC Chairman Lukken Advocates Completely Scrapping Current Regulatory System

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In a speech given yesterday, CFTC Chairman Walker Lukken announced that he will step down as Chairman of the CFTC upon inauguration of President-elect Obama.  Chairman Lukken also advocated completely the scrapping of the current regulatory structure in favor of a “bold, new” regulatory system.  It is unclear how these comments will be interpreted by the CFTC, especially with regard to the release of the proposed forex registration rules.  Continue reading →

Life Settlement Hedge Funds – What is a Life Settlement?

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Over the past few years life settlements have become a more attractive investment opportunity and there is an increase in the amount of hedge funds which are being formed to invest in various life settlement strategies.  This article will discuss life settlements and will introduce some of the issues which hedge fund managers should discuss with their attorney if they want to start a life settlement hedge fund.

From Viaticals to Life Settlements and Premium Finance

Life Settlements are the younger sibling to the Viatical industry which was popular in the 1980’s with regard to AIDS patients (see SEC description of Viatical’s below).  A “life settlement” usually refers to a secondary market transaction on an insurance policy.  Typically an insured will sell its insurance policy to a third party (the investor) who will pay the insured more than the cash surrender value of the policy, but less than the death benefit.  The investor will then be liable for the premium payments and will receive the death benefit upon the death of the insured. Continue reading →

Raising Hedge Fund Capital – Special Investor Meetings

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Often word of mouth is the best way to get an idea spread through groups of people – especially when most forms of marketing are not allowed.  One way to make a name for your hedge fund is through your existing investors who provide a source for potential investor referrals.  If your investors are happy with the returns of your fund and are excited about the investment program or the future prospects, they are likely to mention this to their friends at dinner and cocktail parties. Continue reading →