K&L Gates is one of the leading financial services law firms in the United States and, in London, our U.K. financial services practice has been recommended by the Legal 500 for the past four years.
We represent hedge funds, venture funds and other private funds, as well as investment advisory firms, broker-dealers, registered investment companies, banking organizations and other financial institutions. We work with each of these types of firms on transactional, compensation, regulatory, compliance, litigation, tax and Internet-related issues.
Overview of Our Hedge Fund, Venture Fund and Private Fund Practice
K&L Gates' Hedge Fund, Venture Fund and Private Fund group represents a full range of U.S. domestic and non-U.S. funds in all aspects of their organization, funding, operations and extraordinary transactions. Our clients include hedge funds, venture funds, private equity funds (including leveraged buyout funds and distressed securities or “vulture” funds), offshore mutual funds, U.S. domestic and non-U.S. equity and debt funds, arbitrage funds, real estate funds, “principal-protected” funds, and various other private funds. We work with hedge fund, venture fund and other private fund sponsors, advisers, distributors, key investors and similar participants, as well as custodians, administrators, prime brokers and other private fund service providers.
Our work for hedge fund, venture fund and other private fund clients involves virtually all aspects of their businesses. We advise these funds on organization, structuring, fund-raising, compensation, distribution, trading, U.S. and international regulatory, e-commerce and other issues. We are also frequently called on to assist clients with various “business” issues, such as identifying current market and best practices, evaluating fee and distribution structures, evaluating the terms of agreements with service providers, and similar matters.
We also assist the advisers to, and general partners, managing members and trustees of, hedge funds, venture funds and other private funds in developing their organization and structure. In addition, we often assist these entities in structuring employment and compensation arrangements both for themselves and their employees and advise them on tax planning.
Lawyers in several of our firm’s offices have substantial hedge fund, venture fund and other private fund experience and regularly work and consult with each other on these matters. More than a dozen of our partners, and a substantial number of associates, devote a significant portion of their time to hedge fund, venture fund and other private fund matters. A particular focus of our London office is open-end and closed-end funds that invest in real estate.
We represent all segments of this industry. Our clients include major Wall Street and international investment banking firms, brokerage firms, mutual fund and money management firms, banks and bank holding companies, and insurance companies. We also represent individuals, private firms and other companies in these matters.
We also represent institutional clients, including government agencies, pension funds, universities and endowments, as well as high net-worth individuals, when investing in alternative investments. K&L Gates works 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.
Our clients come to us from across the United States and the United Kingdom and throughout the world. We have represented hedge fund, venture fund and other private fund managers located in Arizona, California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia and other states. We have also represented fund managers with respect to funds offered, sold and/or organized in Europe, Latin America, Asia and Africa. Our London office has particular experience regarding funds established in islands close to the United Kingdom, such as Guernsey, Jersey and the Isle of Man.
Structuring and Organizing Funds
K&L Gates assists U.S. domestic and non-U.S. funds in selecting the appropriate structure and jurisdiction of organization, based on (among other things) regulatory and tax issues and marketing concerns.
In the United States, we have organized funds as limited partnerships, limited liability companies, business and other types of trusts, and Subchapter S corporations. We have also assisted clients with the organization and operation of group trusts under Revenue Ruling 81-100, and other alternatives to limited partnerships and limited liability companies. In addition, we have represented registered investment companies and bank collective funds that have converted into private funds. In the United Kingdom, we are able to advise on typical U.K. fund structures, such as U.K. limited partnerships, U.K. LLPs, Jersey unit trusts and Guernsey exempt companies.
We have assisted U.S. domestic and non-U.S. funds in creating a number of types of sophisticated structures, including fund-of-funds, master-feeder funds, series funds, and mirror and parallel funds structures. We prepare organizational documents (such as limited partnership agreements, limited liability company agreements, trust documents and memoranda and articles of association), private placement memoranda, subscription agreements, investment advisory agreements, prime brokerage, margin, custody and administration agreements, regulatory filings, stock exchange filings, distribution plans and agreements, various policies and procedures, annual and periodic reports, proxy materials, advertising materials and other documents.
Private Investment and Hedge Funds. We represent sponsors of and investors in U.S. and non-U.S. private investment and hedge funds that invest in or actively trade listed securities and other financial instruments. Many of these funds engage in sophisticated trading and hedging strategies, which often include the use of margin, leverage, short sales, futures, options, and swaps. We also represent distributors of these types of funds, as well as sponsors of websites through which information about these types of funds is available.
Non-U.S./Offshore Funds. We have organized offshore funds (including those organized as corporations, partnerships, limited duration companies and trusts) in Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland, the Isle of Man, Jersey, Luxembourg, Mauritius, Panama, and a number of other countries. We represent sponsors of offshore mutual funds, including funds organized as UCITS (which are available for public distribution throughout Europe). When appropriate, we work with local counsel in structuring these funds and in drafting and negotiating organizational and offering documents. We work closely with these clients to assure that their offshore fund activities are coordinated with their U.S. public and private fund activities. We also assist these clients in drafting and revising appropriate policies and procedures and compliance manuals, governing their offshore mutual fund activities.
We coordinate the advice of law and accounting firms from other countries on such matters as offshore fund regulation, registration requirements, solicitation activities, taxation, investor share ownership requirements, and restrictions on the repatriation of investment proceeds and tax reclamation procedures. We have also assisted foreign funds in obtaining listings on a number of non-U.S. stock exchanges, including the Hong Kong, Irish and Philippine Stock Exchanges.
Venture Capital and Private Equity Funds. We represent sponsors of and investors in venture capital and private equity funds and private and public venture fund-of-funds (that is, funds that invest in venture funds). We assist clients in structuring these funds, drafting and negotiating appropriate organizational and offering documents, and structuring and completing investments. As a result of our significant and wide-ranging work with venture funds, we are familiar with the various structures most commonly used by venture funds when structuring incentive and other fees, claw back provisions, distribution provisions, valuation policies, and similar structuring issues.
Other Types of Funds. 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 (including timber), which has included the formation of real estate investment trusts.
We also assist clients on various regulatory issues. In the United States, these include structuring issues under the Investment Company Act of 1940 (the “ICA”) and the Investment Advisers Act of 1940 (the “IAA”), and issues involving offering of fund interests and distribution of fund investments under the Securities Act of 1933 (the “1933 Act”). We also work with a number of major law firms, including several in Silicon Valley, California to assist them in their representation of venture fund clients. In addition, we have represented a number of offshore venture funds, including venture funds organized to invest in Latin America and Asia, and organized to invest in specialized industries, including power, infrastructure and environmentally sensitive industries.
We also represent a number of clients whose business is similar to the business of private venture funds. For example, we represent a number of public and private technology operating companies. In the United States, we regularly advise these and other companies (including many operating companies) on how to avoid inadvertently becoming an investment company, broker-dealer, investment adviser, commodity trading advisor, commodity pool operator and other types of regulated entities. In the United Kingdom, we provide advice regarding the scope of the “collective investment schemes” regime under the Financial Services and Markets Act 2000. In addition, we represent a number of law firms that have created investment pools for their partners and, in some cases, their associates. We also represent registered funds that invest in venture investments.
U.S. Small Business Investment Companies. We 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 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, provision of assistance to SBICs with self-liquidation and receivership issues, and documentation of investments made by SBICs.
In the United Kingdom, we regularly advise small companies on the legal issues associated with their start-up and development funding and we have some growing expertise in the new areas of “Business-Angel Led Enterprise Capital Funds,” which will be joint public/private funding vehicles for small U.K. companies.
For more information please visit our Small Business Assistance practice description.
Advising on Regulatory Issues
We advise U.S. domestic, U.K. and offshore funds on, and assist in preparing policies and procedures relating to, a variety of U.S. and U.K. regulatory issues, including:
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U.S. federal and state private placement issues, including issues under Section 4(2) of the 1933 Act, and Regulation D, Regulation S, Rule 144 and Rule 144A under the 1933 Act;
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U.K. selling restrictions and financial promotion issues;
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U.K. selling agreements for the distribution of funds by managers and selling agents;
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Sections 3(c)(1) and 3(c)(7) exclusions from the definition of “investment company” in the ICA;
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U.K. “collective investment schemes” rules and exemptions and the CIS Sourcebook for regulated funds;
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Regulatory issues under the ICA, including the limitations on investments in registered investment companies imposed by Section 12(d)(1) of the ICA;
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In relation to U.K.-listed funds, the rules of the U.K. Listing Authority (a sub-division of the FSA);
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Exemptions from and regulation under the IAA and comparable state laws, including the regulation of performance fees, principal and cross-trades, solicitation arrangements, custody rules and advertising restrictions;
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Issues relating to the EU Investment Services Directive and pan-European “passporting”;
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Restrictions on the distribution and financing of interests in private funds, including issues involving sales charges and commissions, distribution and sub-distribution arrangements, and the financing of “B share” arrangements;
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Exemptions for bank-sponsored common and collective trust funds under the ICA, including Section 3(c)(3) (for common trust funds) and Section 3(c)(11) (for collective trust funds); the 1933 Act, including Section 3(a)(2) (5th clause) (for common trust funds) and Section 3(a)(2) (7th clause) (for collective trust funds); and the Securities Exchange Act of 1934 (“Exchange Act”), including Section 3(a)(12)(A) (interests in common or collective trust funds) and Section 12(g)(2)(H) (interests in collective trust funds);
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U.S. federal and state bank regulatory requirements (including “Regulation 9” of the Comptroller of the Currency) governing bank-sponsored common and collective trust funds;
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Requirements (including fiduciary responsibility and prohibited transaction requirements) applicable to employee benefit plans investing in private funds under the U.S. Employee Retirement Income Security Act of 1974 (“ERISA”);
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U.S. federal and state tax issues, including partnership taxation, withholding, unrelated business income tax (or “UBIT”), taxation of financial instruments held by funds, analysis of “Double Tax” treaties, and other U.S. domestic and fund tax issues and similar U.K. tax issues;
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Regulatory issues for bank and financial holding companies under the U.S. Gramm-Leach-Bliley Act, including rules governing the holding company’s ability to invest in or control the fund;
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Tax rules and restrictions applicable in the United States to bank-sponsored common trust funds, including Section 584 of the U.S. Internal Revenue Code of 1986 (“Code”);
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The U.S. Commodity Exchange Act exemptions, and registration and regulatory requirements, applicable to funds that use futures and options on futures or invest in funds that do;
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Proxy voting, insider trading, front-running, trading and supervisory issues under the U.S. federal and state securities laws and similar supervisory and conduct of business issues in the United Kingdom;
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Reporting requirements and trading restrictions under Sections 13 and 16 of the Exchange Act;
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Regulatory and business issues relating to swap agreements and other derivative instruments; and
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Advising and organizing “principal-protected” structured products formed as private funds.
Handling Extraordinary Transactions
K&L Gates lawyers have represented funds in a wide range of extraordinary transactions, including:
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Hostile takeover attempts;
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Changes in investment advisers;
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Strategic alliances and joint ventures;
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Restructurings;
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Mergers with other funds;
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Changes in form and/or jurisdiction of organization;
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Changes in investment policies; and
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Changes in permissible investors.
Representing Service Providers
K&L Gates has represented various service providers, including:
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Registered and unregistered private fund investment advisers and managers;
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U.S. and non-U.S. brokers, dealers, finders and other distributors of interests in private funds; and
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U.S. and non-U.S. custodians, transfer agents and administrators.
Our work for these entities has involved negotiating and drafting various agreements, coordinating local counsel in multi-jurisdictional offerings, providing advice in connection with extraordinary private fund transactions, preparing policies and procedures, and reviewing private fund documents.
Keeping Clients Current
We believe that the scope of K&L Gates’ practice helps us keep our private fund clients up-to-date on legislative and regulatory developments that may affect their businesses. We track a broad range of material legal and regulatory developments, including legislative proposals, rule proposals, enforcement proceedings, court decisions, no-action letters, exemptive orders, revenue rulings, private letter rulings, speeches by key regulators, and regulatory trends evident from regulatory inspection programs. Our lawyers try to add value to the generally available reporting on these events by evaluating how new developments are likely to affect our private fund clients and by recommending suitable courses of action.
The scope of our practice also keeps us in touch with, and often directly involved in, industry developments. In addition, we maintain an active dialogue with the staff of the SEC, the Commodity Futures Trading Commission (“CFTC”), in the United Kingdom, the Financial Services Authority (“FSA”), and other regulators. We also speak on and attend conference panels devoted to private funds issues. We also periodically present full-day workshops on private funds. In addition, one of our lawyers has written a book that discusses, among other things, the principal exemptions from the ICA on which private funds rely. As legal and business developments warrant, we also write articles and similar materials on private fund issues, and in the U.K. we regularly distribute to our clients ‘Client Alerts’ on topical, up-to-the-minute changes or proposals to change regulations or legislation, and we produce quarterly newsletters to provide more detailed advice and discussion (such as the U.K.’s newsletter ‘Take Stock’), which is also available through www.klgates.com.
Related Practice Areas
K&L Gates also has extensive experience in a number of practice areas that are or may be important for private funds, which enhances our ability to advise funds on virtually all aspects of their business.
Private Equity and Venture Capital Investment Practice
K&L Gates represents numerous private equity and venture capital funds and other investors in structuring, negotiating and implementing their private equity and debt investments. We have a wide range of experience in minority and control investment transactions, including seed stage financing, later stage funding, bridge financing, private investments in public equity (“PIPES”), leveraged buyouts, restructurings and recapitalizations. We are familiar with the current state of the market, including valuation issues, and what rights are typically afforded to different kinds of investors. We assist our fund clients in structuring their exit strategies, including registration rights agreements, mergers and acquisitions, restructurings and public offerings.
We also represent many start-up technology and other emerging growth companies in industries such as information technology, e-commerce, life sciences, education and advanced manufacturing. K&L Gates’ lawyers frequently advise these clients on venture capital and private equity financing, including providing assistance in identifying appropriate sources of private capital.
Investment Adviser Regulation Practice
A person or entity providing investment advice to a private fund may be subject to registration and regulatory requirements in the United States under the IAA or comparable state laws and in the United Kingdom under the Financial Services and Markets Act 2000. K&L Gates is among the largest investment advisory practices in the United States and a well-regarded financial services practice in the United Kingdom and has extensive experience in the full range of issues relevant to private fund investment advisers and managers, including:
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Registration requirements and exemptions from registration;
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Performance fees;
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Advertising restrictions, including prior investment performance and portability;
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The use of the Internet by investment advisers;
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Soft commission and directed brokerage restrictions;
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Restrictions on principal trades and cross-trades;
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Custody rule requirements;
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Investment advisory agreements;
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Acquisitions and sales of investment advisory firms;
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Proxy voting procedures;
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Record-keeping and reporting requirements;
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Restrictions on marketing activities and referral fee programs;
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Preparing trade allocation and related procedures;
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Establishing policies covering personal trading activities of advisory personnel;
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Advising clients on the applicability of ERISA to their products and services;
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Registering advisers that use futures contracts and options on futures contracts as commodity trading advisors and commodity pool operators and obtaining exemptions from regulatory requirements;
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Developing and conducting training programs;
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Assisting clients in preparing for and responding to SEC, CFTC, NFA, and other regulatory agency and self-regulatory organization examinations;
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Preparing compliance manuals and codes of ethics for advisers and conducting compliance examinations; and
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Representing adviser clients in SEC, state and FSA enforcement investigations and proceedings.
For more information, please see:
Broker-Dealer Practice
K&L Gates’ broker-dealer clients come from every segment of the broker-dealer industry, including full-service broker-dealers and investment banks, brokerage affiliates of investment advisers, banks and insurance companies, market-making firms, Internet brokerage firms and limited-purpose brokers. The U.S. federal and state regulations governing brokers and dealers and, in the United Kingdom, the rules governing brokerage firms can affect private funds in a number of ways. The distributors of interests in a private fund may be subject to registration requirements. Through its trading activities, a private fund may be significantly affected by regulations and practices governing its brokers and dealers, including:
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Best execution concerns;
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Allocation of “new issues”;
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After-hours trading opportunities;
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Securities lending programs;
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Prime broker arrangements; and
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Soft dollar (in the United Kingdom, soft commission) and directed trading programs.
K&L Gates represents private funds and brokers and dealers on these and related issues.
In addition to handling the types of issues discussed above, we help our broker-dealer clients organize and register with the SEC, apply for membership with NASD, Inc. in the United Kingdom, apply for authorization from the FSA, prepare for premembership examinations, draft supervisory procedures, establish due diligence and other compliance procedures and create compliance manuals, prepare agency and underwriting agreements, establish insider trading and related policies and procedures, review and modify broker-dealer training programs and materials, conduct compliance audits, handle enforcement investigations and proceedings, and handle arbitration and civil and criminal litigation.
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Anti-Money Laundering
Most financial services entities, including hedge and private funds, are subject to increasing U.S. government oversight of their activities. Leveraging our years of experience representing clients before regulatory oversight bodies such as the SEC, FSA, CFTC, NASD, NYSE, OCC, FDIC, OTS and the Federal Reserve Board and our specific anti-money laundering experiences, K&L Gates’ cross-practice team can assist with:
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Strategic risk assessments of present business practices (account handling practices, due diligence for new customers, transaction trading and clearing processes) and information systems infrastructure;
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Structuring and performing internal investigations, being sensitive to employment law issues as well as privacy regulations for both employees and customers;
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Responding to regulatory inquiries and enforcement actions thoroughly and effectively while maintaining the security of sensitive competitive information;
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Establishing, reviewing and documenting compliance practices, including procedures, literature, programs and training;
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Thoroughly analyzing the privacy, data protection, information security and cyber crime prevention considerations inherent in reviewing customer accounts and reporting activity to governmental supervisory bodies; and
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Reviewing and drafting third-party vendor relationship agreements, as well as analyzing technology infrastructure to bring present practices into compliance with, in the United States, the USA PATRIOT Act’s requirements and, in the United Kingdom, the requirements of Proceeds of Crime Act 2002 and Money Laundering Regulations 2003.
For more information please see:
Bank Investment Management Matters
K&L Gates has a substantial banking practice, including bank transactional, regulatory, compliance and litigation matters relating to fiduciary and investment management activities. This includes, in the United States, a full range of investment advisory products and services and experience in advising on issues relating to the operation of bank trust and investment securities departments.
In the United Kingdom, our banking team focuses particularly on property finance but also deals with other bank transactional, regulatory, compliance and litigation matters. In the United States, K&L Gates has broad “full-service” capabilities in the area of bank common and collective trust funds, including traditional common trust funds and group trusts and other pooled investment vehicles for employee benefit plans. Our experience and expertise encompasses regulatory approvals, third-party investment adviser arrangements, organizing multi-bank and closed-end structures, ERISA compliance and prohibited transaction exemptions, bank regulatory compliance (Regulation 9, etc.), fund modification, reorganization and termination, and documentation and disclosure materials.
K&L Gates also represents a number of U.S. domestic and offshore private funds that were organized, advised, and/or distributed by banks and banking organizations. We also have represented banks in converting common and collective trust funds to proprietary mutual funds and to private fund structures.
For more information, please see:
ERISA Practice
We have significant experience assisting private funds and their advisers both in avoiding having fund assets treated as “plan assets” and, in cases where fund assets are considered plan assets, advising clients regarding compliance with ERISA’s requirements.
We also assist funds in preparing appropriate disclosures for employee benefit plan investors. Our advice also typically addresses the threshold ERISA and Code issues that may arise when a private fund is offered to the sponsor’s existing benefit plan clients.
In addition to our work with private fund clients, K&L Gates’ ERISA lawyers have extensive experience with employee benefit plan organization and operation, as well as the fiduciary responsibility issues applicable to providers of financial services to plans. We work with the Department of Labor on behalf of our clients on fiduciary and prohibited transaction issues between employee benefit plans and their financial services providers, including private funds, investment advisers, broker-dealers and trust departments. We also advise investment advisory clients about ERISA restrictions on the provision of services to employee benefit plans and the receipt of compensation from third parties with respect to employee benefit plan services or investments.
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Tax Practice
In the United States, K&L Gates’ Tax group advises clients on tax requirements applicable to partnership classification, avoidance of “publicly traded partnership” status, separate classes or series of shares, unrelated business taxable income, and tax consequences of options, futures and swaps trading, foreign currency transactions and investments in other financial products. We also assist clients in connection with reorganizations that involve conversions of private funds and bank common and collective funds into private funds and other matters involving information reporting, withholding on reportable payments, and tax section disclosure in private placement memoranda. Our tax experience extends to our offshore funds practice as well, where tax considerations, both U.S. and international, often represent a central consideration in structuring these vehicles, including passive foreign investment company, foreign personal holding company and controlled foreign corporation issues. Our U.K. tax team advises on the full range of U.K. direct and indirect taxation and has particular recent experience of advising on complex tax-driven fund structures for indirect investment in real estate.
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Derivative Instruments
In the United States, K&L Gates advises private funds, investment advisers, brokerage firms and other financial services firms on regulatory issues relating to their use of futures contracts, options, swaps and other derivative instruments. This includes:
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Reviewing, negotiating and preparing documentation for swaps, caps, collars, floors and other privately negotiated financial instruments;
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Registration with the CFTC and the National Futures Association (“NFA”);
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CFTC and NFA disclosure, reporting and record-keeping requirements;
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Supervisory and internal liability control policies and procedures regarding futures and options advice and trading;
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Policies and procedures for portfolio holdings involving futures, options and other derivative instruments;
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Qualifying for exemptions from CFTC and NFA registration; and
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Reviewing account agreements between private funds and futures commission merchants or broker-dealers regarding the trading of futures contracts and options.
We also represent commodity pool operators and commodity trading advisors on CFTC and NFA regulatory compliance and enforcement matters.
For more information, please see:
Technology/Internet Issues
Increasingly, private funds are relying on the Internet for distribution, shareholder communications and other purposes. We have substantial experience assisting private funds that create websites or otherwise use the Internet in complying with U.S. and U.K. securities law and related issues raised by these activities. We also represent sponsors of websites through which information about third-party private funds is available. In addition, K&L Gates’ Telecom Media and Technology group works with financial services and other companies (ranging from start-up companies to Fortune 100 companies) on the full range of commercial and e-commerce issues faced by companies doing e-business.
We are also actively involved in advising clients on legislation governing the law of electronic commerce, including the federal Electronic Signatures in Global and National Commerce Act (“E-SIGN”) and its state law analogue, the Uniform Electronic Transactions Act (“UETA”).
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Custody, Transfer Agent and Administrative Practice
K&L Gates advises our private fund clients with respect to their relationships with independent transfer agents, custodians, and other service providers. This includes preparing and negotiating service agreements, negotiating and documenting changes in service providers, and resolving regulatory and other issues.
We also provide advice on legal and regulatory protection and securities settlement processes both inside and outside of the United States. We review and negotiate the terms of the service agreements between the service providers and their clients and advise clients concerning compensation and other regulatory issues that arise from these relationships.
In the United States, we have significant experience in securities transfer and pledge issues arising under Articles 8 and 9 of the Uniform Commercial Code, such as questions relating to maintaining securities in custody accounts under revised Article 8’s indirect holding system, obtaining or creating interests in securities and other investment property, the issuance of uncertificated shares, lost certificate issues, adverse claims and protected purchasers, and the assertion of tax or creditors’ liens. In addition, we advise fund and transfer agency clients on compliance with state abandoned property laws.
U.S. Mutual Funds and Other Registered Investment Companies Practice
Our private funds practice is significantly enhanced by the experience gained through our representation of registered funds. While private funds and registered funds face a number of different regulatory, operational, distribution and other issues, there also are a number of issues these funds often have in common, including regulatory, disclosure and trading issues.
Approximately a quarter of the lawyers in K&L Gates’ Investment Management group have held various positions on the SEC staff, many with the SEC’s Division of Investment Management. Because of the level of our U.S. practice, our collective experience at the SEC and other regulatory agencies, our active participation in industry conferences and our experience as counsel to major investment management firms, we have solid working relationships with senior regulatory officials and key industry leaders in the United States.
Our work on SEC matters on behalf of our clients covers a broad spectrum, which includes resolving SEC staff comments on registration statements, obtaining significant exemptive orders and no-action letters, responding to periodic regulatory issues raised by the SEC staff during inspections, representing clients in enforcement investigations and proceedings, and assisting in the adoption of and changes to SEC rules. We also serve as outside counsel to investment company industry associations on a variety of projects, including legislative and policy matters.
In this regard, we have one of the largest and most experienced investment management practices in the United States. At any given time, more than 90 K&L Gates lawyers work exclusively or substantially on investment management and related matters in our Boston, Hong Kong, London, Los Angeles, New York, Portland, Taipei, San Francisco, Seattle, and Washington, D.C. offices.
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Regulatory Compliance, Enforcement and Litigation Practice
K&L Gates’ extensive regulatory practice enhances our ability to advise private fund clients by providing significant insights into current regulatory issues and views. For example, in the United States, we conduct regulatory compliance audits that cover the full panoply of compliance issues arising under the ICA, the IAA and the broker-dealer regulatory provisions of the Exchange Act, as well as NASD regulations. These confidential audits are often requested by clients in anticipation of an SEC or SRO inspection. Our regulatory compliance services include examining and developing controls over portfolio management, trading and soft dollar practices, pricing, personal trading, marketing, advertising and sales practices. In the United Kingdom, we provide advice on FSA regulation relevant to private fund clients.
In addition, K&L Gates’ Securities Enforcement group has more than 35 lawyers who focus their practice on defending clients in all aspects of enforcement investigations and proceedings by the SEC, the NASD and other securities regulators, including, in the United Kingdom, the FSA. We have approximately 30 lawyers who gained firsthand knowledge of the enforcement agencies by working at the SEC, the NASD and the CFTC. This collective experience provides us with a thorough understanding of securities regulators, their culture, their decision-making processes and the way they operate.
In the United States, K&L Gates’ extensive knowledge of the federal and state securities laws enables us to handle all types of securities litigation matters. We have represented clients in matters ranging from small arbitrations under the auspices of the NASD or New York Stock Exchange to large class actions and shareholder derivative suits in numerous state and federal courts. Some of the recent litigation matters involving private funds have included allegations of improper sales practices, improper pricing, excessive fees and inadequate disclosure. In the United Kingdom, we have a “full service” litigation practice that has particular expertise in international arbitrations.
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Employment Law Practice
Our lawyers have substantial experience in assisting advisers of U.S. and non-U.S. funds and structuring compensation arrangements, including deferred and incentive compensation arrangements. We structure and negotiate employment and noncompete agreements for key personnel, including interpreting and enforcing these agreements. Where appropriate, we also litigate these matters in courts and participate in arbitration proceedings.
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