Monthly Archives: December 2008

NFA Proposes that all CPO and CTA Disclosure Documents be Filed Online

CFTC Responds by Proposing Changes to CFTC Regulations Regarding Disclosure Documents

The CFTC recently proposed a change to its regulations based on a request from the NFA. The proposed regulations would require CPO and CTA disclosure documents to be submitted only online to the NFA for approval. The CFTC is requesting comments on this proposal which must be recieved on or before December 26, 2008. The Hedge Fund Law Blog will be sumitting comments on this proposal. We believe that this is a good change. We may also ask for clarification to make sure that such requirement will also apply to Forex CTOs and Forex CTAs. Please let us know if you have any comments to the proposed rules which are reprinted in their entirety below.

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NFA Continues to Pursue Forex Regulation for Current Forex Dealer Members

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Two new releases indicate that the NFA is serious about regulating the off-exchange foreign currency markets

On our sister website, www.forexlawblog.com, we have detailed the continued regulatory actions by the NFA with regard to the current regulation of the off-exchange forex markets. The two notices, described in further detail below, apply to Forex Dealer Member and their interactions with their clients. While the CFTC has been slow to promulgate rules regarding the expected new Forex regulations, the NFA has acted swiftly and addressed many important issues. However, forex managers should still get ready for coming forex regulations – a collegue of mine has recently discussed forex registration with a CFTC compliance person and that person expects that proposed rules will be promulgated within the first quarter of next year. As always, stay tuned as we will continue to stay on top of this issue.

A summary of the two NFA actions is included below. Continue reading →

Registration Renewal For Brokers (IARD Notice)

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It is that time of the year for registration renewals. Renewal notices for investment advisor registration renewal were sent out by many states this week. Additionally, brokers and brokerage firms will need to renew all of their registrations. The following is the registration renewal notice I recieved today. If your firm needs help with registration, please feel free to contact us. Continue reading →

Authority of Various Securities Laws and Releases/ Interpretations

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The reference below comes directly from the SEC website and provides the reader with a good overview of the different laws and rules which govern the hedge fund industry, and the order in which those rules are applied (that is, the securities statutes trump SEC interpretive releases). This reference is important for hedge fund managers to understand because there are many different types of authority which are cited in this blog and in the hedge fund offering documents and hedge fund compliance manuals. If you have questions on what sources are the most important for your particular situation, you should discuss this with your hedge fund attorney. As always feel free to contact us if you have legal questions regarding your hedge fund. Continue reading →

Hedge Fund Administrator Completes SAS 70 Type II (Press Release)

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GlobeOp Successfully Completes SAS 70 Type II Examination for Second Consecutive Year

LONDON, UK; NEW YORK, NY, USA – 4 December 2008 – GlobeOp Financial Services (“GlobeOp®”, LSE:GO.) today announced that, for the second consecutive year, it has successfully completed a SAS 70 Type II examination of specified middle-, back-office and fund administration controls by accounting and auditing firm Ernst & Young LLP. Continue reading →

Hedge Fund Strategy – Energy Focused Hedge Funds

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We have previously provided an overview of hedge fund trading strategies. While we mentioned the major trading strategies, we did not mention some of the more niche trading strategies like energy focused hedge funds. Energy focused hedge funds can utilize a number of different trading strategies from investing only in energy related companies to investing only in energy commodities (commodity pools). Like many of the different strategies, the structure of energy hedge funds will depend on a number of factors including the instruments traded and the expected lifespan of the investments. Additionally, if the energy hedge fund does trade in commodities, the manager may need to be registered as a CPO. Continue reading →

Another CFTC CPO Fraud Notice

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Below is a CFTC notice regarding another fraudulent commodity futures manager out of California. The manager, who was apparently registered as a CTA, engaged in a variety of frauds on his clients and was also not properly registered as a commodity pool operator. Investors are again urged to engage in proper hedge fund due diligence before investing in any hedge fund, including hedge funds which trade commodity futures. Continue reading →

Hedge Fund Performance – Performance Better than Expected

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A recent study by PerTrac reveals that not all hedge funds are having terrible performance returns in this volatile market environment. The study also finds other interesting information including (i) many funds use little leverage and (ii) almost 50% of funds allow monthly redemptions (however the study does not mention the amount of funds which have used “gates” to limit redemptions). Other related hedge fund articles on Hedge Fund Law Blog include:

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California Investment Advisors Renewal Notice

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I received this notice today from the California Department of Corporations. All California registered Investment Advisors should take note that IARD renewal fees are due by next Friday, December 12. If you are registered and need help with the renewal process, please contact us. Continue reading →

Investment Advisor Barred From IA Industry For Matching Trade Fraud

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Hedge fund managers should not match trades between commonly managed accounts in thinly traded (or illiquid) securities as this may pose potential problems under the Investment Advisors Act of 1940. This holds true whether the hedge fund manager is registered or unregistered. As the release below shows, the manager may be subject to fines and/or other penalties for such trading. If a hedge fund manager does wish to engage in such trading, he should discuss this option with a hedge fund attorney. Please contact us if you have any questions. Continue reading →