Advising Hedge Funds on Trading Strategies: Avoiding SEC Reporting Violations and Other Legal Pitfalls

Passive vs. Active Investor Status, Insider Trading Scenarios, 13(d) and 16 Filing Requirements

A live 90-minute CLE webinar with interactive Q&A


Wednesday, June 26, 2019

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, May 31, 2019

or call 1-800-926-7926

This CLE webinar will analyze various trading issues fund counsel should consider when advising hedge funds and their managers. The panel discussion will include the ramifications of becoming an "activist" investor, insider trading scenarios which can arise for hedge funds, and filing requirements associated with certain ownership thresholds (and how to avoid them).

Description

The trading activities of hedge funds raise many complex issues under federal securities laws. Fund counsel should have a thorough understanding of the securities regulatory framework in which hedge funds operate. The panel will focus on real life practical problems that hedge funds routinely encounter.

Interactions with other investors or management can cause the fund to be viewed as seeking to influence the management of the company and subject the fund to heightened "activist" regulatory requirements, such as having to file a long-form Schedule 13D instead of a short-form Schedule 13G or become a member of a “group” and have to comply with reporting requirements under Section 16.

Hedge funds routinely face insider trading concerns as they trade equity or debt. Sometimes issues are fairly obvious, such as when the fund has learned material, non-public information, but other insider trading issues are more subtle and complex. A fund may learn information from a source other than the issuer, or gather pieces of immaterial information that, when combined with other public information, complete a mosaic that provides material trading insight.

The scope of both Section 13(d) and Section 16 may cover an investor whose holdings do not by themselves exceed the 5% or 10% thresholds if the investor is deemed part of a Section 13(d) "group" that acquires the threshold levels of beneficial ownership. Counsel may be asked how to structure around an investment to avoid acquisition of a level of "beneficial ownership" that subjects the investor to Section 13(d) and/or Section 16, or limit the scope of the transactions that it must report (and thereby also limit its exposure to liability).

Listen as our authoritative panel discusses these and other issues which hedge funds need to navigate when making trading decisions and dealing with companies in which they are invested.

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Outline

  1. Hedge funds and securities regulation--a general framework
  2. When passive investors drift into activist status
  3. Insider trading concerns: focus on subtle and complex issues
  4. Special issues under Sections 13(d) and 16 of the Exchange Act

Benefits

The panel will review these and other essential questions:

  • When is a hedge fund deemed to be an "activist" investor subject to more rigorous filing and reporting requirements?
  • What is the mosaic theory of insider trading, and what steps can a fund take to avoid being found to be trading on non-public information?
  • How might an investment fund or group of funds structure around the 5% or 10% thresholds that trigger filing and reporting obligations under Section 13(d) and Section 16?

Faculty

Wells, Christopher
Christopher M. Wells

Partner
Proskauer Rose

Mr. Wells advises fund managers and investors on all aspects of the hedge fund business, including fund structuring and...  |  Read More

Zarb, Frank
Frank Zarb

Partner
Proskauer Rose

Mr. Zarb is a partner in the Corporate Department, where he concentrates his practice on regulatory matters under the...  |  Read More

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