Tag Archives: hedge fund insurance

Hedge Fund Business & Technical Issues


In addition to providing startup and established managers with information on various hedge fund laws and regulations, we have also provided a number of articles on the general business issues that hedge fund managers need to address.  These articles cover a number of areas and many of the articles below are from service providers to hedge funds.  Please feel free to suggest other areas for us to explore in future articles.

Hedge Fund Technology, IT and Internet Issues

  • IT Issues for Hedge Fund Managers – this article, written by a technology solutions firm, details some of the IT solutions which are available to hedge fund managers who will need to register after the new hedge fund registration rules are adopted.  These issues also apply for currently registered (SEC or state) hedge fund managers as well.
  • Data Warehouse Implementation for Hedge Funds – a summary of a panel discussion on the reasons managers should think about implementing a data warehouse system.
  • Hedge Fund Hotels – hedge fund hotels offer managers a whole suite of hosted services for turnkey back office implementation.
  • Hedge Fund Domain Names – this article discusses domain names for hedge fund managers.
  • Hedge Fund Managers and Blogs – this article discusses whether hedge fund managers can run a blog.

Hedge Fund Tax Issues

  • Proposition Q and Hedge Funds – hedge fund managers located in San Francisco should be aware of Proposition Q (a special San Francisco payroll tax) and how it will affect them and their top earners.

General Business Issues

  • Hedge Fund Employment Law Issues – this article, forthcoming, will discuss the issues that managers need to consider when they bring on employees for the first time.  While each state will have different laws and regulations which the manager will need to follow, there are general items which a manager should be prepared for including establishing a structure to pay state and federal income taxes for employees.
  • IP Licensing Agreements – this article, forthcoming, will discuss the business and legal issues involved when managers license their intellectual property to a hedge fund.
  • Hedge Fund Management Company Insurance – this article discusses the costs of insurance for hedge fund management companies.
  • Hedge Funds and Rehypothication – this article discusses rehypothication as it relates to hedge funds.
  • Prime Brokers, Margin Lock-ups and Hedge Funds – this article discusses prime broker margin lock-ups and some of the issues which managers should understand.
  • Hedge Fund Operational Issues and Failures – this article discusses a press release about a white paper released from a hedge fund due diligence firm.  The firm examines the reason why many hedge fund managers fail.
  • Hedge Fund Operations During a Pandemic – examines the issues which face managers because of the H1N1 virus.
  • Agreed Upon Procedures – hedge fund managers sometimes will engage auditors to provide “agreed upon procedures” especially with regard to their Level III assets.  This article, written by a hedge fund due diligence firm, provides some thoughts on how investor may view these procedures in the future.  Managers should be aware of how investors (or potential investors) might view these types of engagements.
  • Women and Hedge Funds – this article explores the world and opportunities for women in the hedge fund industry.
  • Naming Your Hedge Fund – this article discusses common hedge fund naming conventions.
  • Hedge Fund Best Practices – discussion of the President’s Working Group on Financial Markets (PWG) report on hedge fund best practices.
  • SIPC Customer Asset Protection – statements by FINRA and the SEC on asset protection for customers.

Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs Hedge Fund Law Blog and can be reached directly at 415-868-5345.

Thinking about Hedge Fund E&O insurance?

If so, you better be aware of any potential liabilities against your organization. In an action against a hedge fund insurance company, an insured investment adviser lost in a claim against the insurance company for $5 million in losses. The reason the investment adviser lost the claim is, centrally, because they should have revealed to the insurance company that they could be subject to future suit. The actual reason for the suit was because the investment adviser took on leverage in excess of the limits which were disclosed in the fund’s private placement memorandum. This situation again highlights the perils of hedge fund style drift and/or improper disclosure of the proposed investment program within the private placement memorandum.

The case is:MDL Capital Management v. Fed. Ins. Co., (W.D. Pa. July 25, 2008).