K&L Gates' core Financial Services practice area includes one of the largest and most experienced Investment Management groups in the United States and globally. More than 150 lawyers in offices in the United States, Europe, Australia, and Asia spend the majority of their time providing legal services to the investment management and professional investor communities. With an exceptional depth of knowledge and experience, the lawyers of K&L Gates are leading the way in assisting clients with investment management strategies.
Our clients represent a cross-section of the investment management industry, including both financial service providers, such as investment advisers, broker-dealers, banks, trust companies, and insurance companies, as well as investment vehicles and other institutional investors, such as open- and closed-end registered investment companies (and their independent directors), exchange-traded funds (ETFs), hedge funds (onshore and offshore), commodity pools, business developments companies, retirement plans (ERISA and governmental plans), and collective investment funds sponsored by banks and trust companies.
K&L Gates also works closely with public agencies in a variety of capacities and, as a result, we have a heightened sensitivity to the issues that concern government-related clients and others with significant fiduciary obligations that may be specified by state or local statutes. Additionally, many of our lawyers have substantial experience with complex commercial transactions and investment instruments, including insolvency of portfolio companies and the purchase of instruments that raise unusual legal or tax issues.
Our Securities Enforcement lawyers have extensive experience with SEC examinations of investment advisers, broker-dealers, and investment vehicles of all kinds, as well as administrative proceedings and litigation involving funds and other managed investment products and their principal service providers.
Many of our U.S. lawyers have worked at the SEC or other regulators, trade groups, or in-house positions, and our lawyers have good working relationships with senior regulatory officials and key industry leaders. We regularly serve as outside counsel to industry associations on a variety of projects, including legislative and policy matters, and are actively involved in industry developments.
Broker-DealersBroker-dealer clients constitute a significant component of our investment management practice. Our clients come from every segment of the broker-dealer industry, including full-service broker-dealers and brokerage affiliates of investment advisers, banks and insurance companies. In the U.K., we also advise the equivalent organizations, although they are not known in the U.K. as "broker-dealers" or "brokerage affiliates." Among other matters, we advise clients on:
We regularly help our clients organize and register with the SEC and FSA, apply for SRO membership, prepare for pre-membership examinations, draft supervisory procedures, create compliance manuals, establish insider trading and related policies and procedures, review and modify broker-dealer training programs and materials, conduct compliance audits, and handle enforcement investigations and proceedings as well as arbitration and civil and criminal litigation. See our Broker-Dealer practice for more information. (link)
Custodians, Transfer Agents, and Other Service Providers
We advise transfer agent companies, including newly organized transfer agents. We have established or updated their operations manuals, procedures, and forms; advised on their record-keeping requirements; conducted internal compliance audits; assisted with regulatory compliance examinations; advised on U.S. federal transfer agent registration requirements; and advised clients in the United States on how to avoid registration as a broker-dealer or clearing agency. We also represent custodians and administrators in connection with mutual fund matters.
We advise investment management clients regarding their relationships with independent transfer agents, custodians, and other service providers. This includes negotiating service agreements, negotiating and documenting changes in service providers, and resolving regulatory and other issues. Our lawyers also represent clients in relationships with third-party administrators and other retirement plan service providers, who perform sub-accounting, administrative, and sub-transfer agency functions relating to the investment company or managed account holdings of plan participants. We review and negotiate the terms of the service agreements between the service providers and their investment management clients and advise clients concerning the compensation and other regulatory issues that arise from these relationships.
K&L Gates' U.S. investment adviser practice is among the largest in the United States. Our attorneys have extensive experience with the regulatory and legal issues affecting institutional and private advisory accounts, including pension plan accounts, hedge funds, other private investment funds, and offshore funds. We provide our investment adviser clients with a full range of legal services, including:
We additionally assist clients in their dealings with regulators, including applying for exemptions and no-action relief as well as preparing for and responding to regulatory examinations and enforcement investigations and proceedings. We have also drafted the state uniformity provisions under the National Securities Markets Improvement Act mandating state uniformity in investment adviser regulations and drafted updating comprehensive model amendments to state investment adviser laws which have been widely adopted among the states.
K&L Gates' alternative investment management practice represents institutional clients, including government agencies, pension funds, universities, and endowments, as well as high net-worth individuals, in evaluating, negotiating, and structuring alternative investments. We work closely with public agencies in a variety of capacities and, as a result, we have a heightened sensitivity to the issues that concern governmental-related clients and other clients with significant fiduciary obligations.
In our alternative investment management practice, we have unique experience in unusual private equity transactions, including formation of proprietary funds and funds-of-funds, strategic investments in management entities, and the start-up of fund managers. We have also helped in the formation of, and counseled clients investing in, funds owning intangible assets (other than stocks and securities), real estate, and natural resources, which has included the formation of real estate investment trusts.
Bank Investment FundsWe assist bank, trust company, and other financial institution clients on the full range of investment management and related fiduciary issues. Several of our lawyers have extensive experience regarding permissible securities and fiduciary activities of banks and bank and financial holding company affiliates. Among other matters, we have advised banking clients on:
In the United States, in connection with the formation and operation of bank proprietary mutual funds registered under the Investment Company Act of 1940, we regularly counsel banks and their affiliates regarding Gramm-Leach-Bliley Act (including residual Glass-Steagall Act) matters, marketing strategies, and the procedures required for properly investing fiduciary and nonfiduciary accounts in the funds. We have prepared training and compliance materials for banks offering proprietary funds and conducted training seminars for bank employees. We also provide legal services on issues relating to the operation of bank trust and bond departments.
Hedge Funds, Venture Funds, and Private Funds K&L Gates represents a full range of U.S. domestic and non-U.S. funds in all aspects of their organization, funding, operations, and extraordinary transactions. Approximately 20 of our partners and of counsel, and a substantial number of associates, devote a significant portion of their time to hedge fund, venture fund, and other private fund matters. We work with fund sponsors, advisers, distributors, key investors, and similar participants, as well as custodians, administrators, prime brokers, and other private fund service providers.
Our work involves virtually all aspects of the fund business. We advise on organization, structuring, fund-raising, compensation, distribution, trading, e-commerce, and other issues, and counsel fund managers on the regulatory aspects of their businesses and operations. We represent all segments of this industry and evaluate fund documents for institutional investors seeking alternative investments. Our clients include major fund managers, Wall Street and international investment banking firms, brokerage firms, mutual fund and institutional management firms, banks and bank holding companies, insurance companies, family offices, government agencies, pension funds, universities, and endowments. See our Hedge Funds, Venture Funds, and Private Funds practice for more information. (link)
K&L Gates' Investment Management practice also provides legal and compliance assistance to insurance companies, employee benefit plans, banks and other regulated financial institutions, broker-dealers, insurance agencies, and other financial service providers seeking to issue, sell, and/or invest in fixed and variable life insurance and annuity products, including guaranteed investment contracts (GICs) and bank investment contracts (BICs). The scope of our services includes:
Investment Companies / Mutual Funds
We have one of the leading registered funds practices in the United States and globally. We represent clients in connection with the full range of investment company industry products and activities, including all types of open-end and closed-end investment companies, funds of funds, funds of hedge funds, ETFs, variable insurance products, private and offshore investment funds, and unit investment trusts. Our practice involves all aspects of the investment company business, from organizing and registering open- and closed-end funds to providing ongoing advice and representation to the funds and their advisers, directors, and distributors. The scope of our services includes advice and assistance related to:
We have extensive dealings with regulators other than the SEC, such as the Department of Labor, Financial Industry Regulatory Authority (FINRA), Commodity Futures Trading Commission (CFTC), and federal and state banking regulators. In the U.K., we have regular dealings with the Financial Services Authority (FSA).
Over-the-Counter Derivatives (OTC)
K&L Gates regularly advises a variety of hedge funds, mutual funds, corporations, and other end-users in structuring, negotiating, and documenting a full range of over-the-counter derivatives (OTC), including credit, equity, interest rate, currency, energy, and other commodity derivatives. Our OTC derivatives work begins with basic derivatives documentation, including International Swaps and Derivatives Association (ISDA) and non-ISDA master agreements, confirmations, security agreements, control agreements, guarantees, and related documentation, as well as industry-standard documentation for foreign exchange, currency forwards, currency option, and related OTC transactions. We also assist in structuring and in preparing the full range of documentation covering structured transactions, such as collateralized loan obligations (CLOs), collateralized bond obligations, credit-linked notes, synthetic collateralized debt obligations (CDOs), and other complex products.
We handle transactions including structured derivative products and synthetic investments, as well as swaps, caps, floors, collars, forward rate transactions, and forward purchases and sales. Our dealer clients' counterparties regularly include hedge funds, mutual funds, commercial banks, pension funds, foreign and domestic corporations, special purpose entities, REITs, and other derivatives dealers.
We represent banking concerns and institutional investors in connection with the financing of industrial, commercial, and residential developments. In addition to our experience in traditional real estate finance, we have also been involved in developing creative financing techniques such as shared appreciation mortgages, complex participation arrangements, synthetic lease transactions, credit tenant leasing matters, leveraged leasing, and tax-exempt debt financing. Our technical experience is combined with an in-depth commercial understanding of the real estate sector and our clients' objectives.
Small Business Investment CompaniesWe provide a full range of services to principals, managers, and investors in Small Business Investment Companies (SBICs), which are private equity funds licensed and leveraged by the U.S. Small Business Administration. We also assist small businesses that receive investment capital from SBICs. We provide assistance to SBICs in structuring and licensing and maintaining regulatory compliance. We represent management and investors in SBICs in partnership agreement negotiations and represent SBICs and the recipients of their assistance in documenting transactions.
Representative SBIC engagements include formation, structuring, and licensing of multiple SBICs; provision of assistance with regulatory and leveraging matters; representation of principals and investors in SBICs for due diligence, structuring, and regulatory matters; and provision of assistance to SBICs with self-liquidation and receivership issues and documentation of investments made by SBICs.
In the U.K., we regularly advise small companies on the legal issues associated with their start-up and development funding. We recently responded to a U.K. government consultation on the development of "Business - Angel Led Enterprise Capital Funds," joint public/private funding vehicles for small U.K. companies.
State and Municipal Retirement Plans
K&L Gates counsels state, municipal, and other institutional investors in the structuring and formation of investments in domestic and international alternative investments, including hedge funds, fund of hedge funds, private equity funds, venture capital funds, real estate funds, and other private investment funds. Our lawyers work closely with investors providing advice in multiple disciplines with the requisite industry knowledge and are solely focused on the client's objectives. We help clients focus, when appropriate, on the corporate governance, regulatory, ethical, and other fiduciary requirements which are applicable to our institutional investor clients.
Anti-money laundering compliance is an increasingly important issue for business. In the United States, the USA Patriot Act, which became law on October 26, 2001, expands the obligations of financial institutions to implement programs and procedures to detect and prevent money laundering. In many respects, compliance with the act's provisions poses new challenges to the investment management industry. K&L Gates' multi-disciplinary Anti-Money Laundering practice provides enterprise-wide solutions for companies at all levels of the investment management industry.
In the U.K., the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003 have extended the scope of U.K. money laundering regulations, partly by expanding customer identification and reporting requirements. Our London office can advise on the challenges these regulations pose for U.K. business.
Employee BenefitsOur ERISA practice offers extensive experience regarding employee benefit plan organization and operation as well as the fiduciary responsibility issues pertinent to providers of financial services to plans subject to ERISA. Our services in this field include structuring and reviewing service provider alliances, advising clients in connection with their retention of service providers, preparing documentation for investment vehicles for benefit plan investors, and providing advice regarding application of the prohibited transaction provisions of ERISA and the U.S. Internal Revenue Code.
We work regularly with the U.S. Department of Labor and the U.S. Internal Revenue Service on behalf of our clients on fiduciary and prohibited transaction issues between employee benefit plans and their financial service providers, including investment advisers, investment companies, broker-dealers, and trust departments. We also advise investment advisory clients with respect to ERISA compliance matters concerning the provision of additional services to plans and the receipt of compensation from third parties with respect to plan services or investments.
Enforcement, Litigation, and ArbitrationWe have an experienced Securities Enforcement group, with more than 25 lawyers focused on defending clients in all aspects of private litigation, including class actions and enforcement investigations and proceedings by the SEC, FINRA, and all state securities commissioners and other securities regulators including, in the U.K., FSA enforcement actions and the handling of disciplinary matters. Our lawyers in the United States also have considerable experience in dealing with a multiplicity of federal and state regulators in multi-jurisdictional enforcement investigations. We also have significant experience defending clients in the litigation and arbitration of securities-related claims, including many involving investment management issues.
Securities Regulatory ComplianceOur clients place substantial confidence in our firm regarding the sensitive and often critical area of regulatory compliance and enforcement. Because the mere allegation by a securities regulator or private plaintiff of wrongdoing can cause great damage to the target of the allegation, we appreciate the value of preventing the institution of public enforcement actions or significant legal actions.
We help clients develop compliance systems and procedures, and we conduct regulatory compliance audits that cover the full panoply of compliance issues. In the United States, this includes issues arising under the Investment Company Act, the Investment Advisers Act, and the broker-dealer regulatory provisions of the Securities Exchange Act, as well as state securities laws, FINRA regulations, and the GIPS Performance Presentation standards. These confidential audits are often requested by clients in anticipation of an SEC, state, or SRO inspection. Our regulatory compliance services include controls over portfolio management, trading and soft dollar practices, pricing, personal trading, marketing, advertising, and sales practices with respect to sales of mutual fund shares and investment advisory services.
TaxGlobally, we have extensive tax law experience to supplement the firm's investment management practice. K&L Gates' lawyers have worked on various international tax-planning strategies and transactions.
U.S. Tax GroupIn the United States, we advise clients on tax requirements applicable to separate classes or series of shares, Subchapter M qualification issues, tax consequences of options and futures trading, foreign currency transactions and investments in other financial products, and required distributions under the pass-through tax treatment of the Internal Revenue Code. We also assist clients in connection with reorganizations that involve one or more investment companies and conversions of private funds and bank common and collective funds into registered investment companies and other matters involving excise tax issues, information reporting, withholding on reportable payments, and tax section disclosure in registration statements. We regularly prepare and submit requests on behalf of investment management clients for private letter rulings. Our tax experience extends to our hedge fund and offshore fund practice as well, where tax considerations often represent a central consideration in structuring these vehicles.
U.K. Tax GroupIn the U.K., our tax lawyers offer advice on all direct and indirect U.K. taxes. Particular areas of specialization include real estate taxation, Stamp Duty, and Stamp Duty Land Tax.
U.S. CFTC Regulation of Commodity, Futures, and Swaps Funds
Our lawyers regularly advise investment advisers, registered investment companies, and hedge funds on regulatory issues relating to their use of futures contracts, options, swaps, and other derivative instruments. This includes CFTC registration, reporting and record-keeping requirements, and supervisory and internal liability control policies and procedures regarding futures and options advice and trading. We prepare policies and procedures for investment company portfolio holdings involving futures, options, and other derivative instruments; assist clients in obtaining exemptions from CFTC regulations; review account agreements between investment companies and futures commission merchants or broker-dealers regarding the trading of futures contracts and options; and prepare swap documentation. We also represent commodity trading advisers on CFTC regulatory compliance and enforcement matters.