K&L Gates' core Financial Services area includes one of the largest and most experienced Investment Management groups in the United States. More than 100 lawyers in 14 offices (Austin, Boston, Chicago, Fort Worth, Hong Kong, London, Los Angeles, New York, Portland, Raleigh, San Francisco, Seattle, Taipei and Washington, D.C.) spend the majority of their time providing legal services to the investment management and professional investor communities, with a depth of knowledge and experience that is unsurpassed. Our clients include open- and closed-end investment companies and their independent directors, hedge funds (on-shore and offshore), ETFs, insurance companies, broker-dealers, investment advisers, retirement plans, banks and trust companies, and other service providers to the investment industry.
We also represent institutional clients, including government agencies, pension funds, foundations, universities and endowments, as well as high net-worth individuals, in evaluating, negotiating and structuring 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 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. We often assist the managers of investment funds dealing with complex or novel instruments or situations, including insolvency of portfolio companies and the purchase of instruments that raise unusual legal or tax issues.
Among service providers, we represent investment advisers and broker-dealers that manage or deal with the assets of registered funds, pension funds, hedge funds and individuals. We have extensive experience assisting banks and trust companies with unregistered common and collective trust funds. We also serve as counsel to custodians, transfer agents and other service providers within the investment company industry.
Our Securities Enforcement group has extensive experience with SEC examinations of broker-dealers, investment advisers and investment vehicles of all kinds, as well as administrative proceedings and litigation involving funds and other managed investment products, as well as their principal service providers.
Many of our U.S. lawyers have worked at the Securities and Exchange Commission or other regulators, trade groups or in-house positions. 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. Attorneys in our Pension and Benefits group have extensive experience with ERISA and maintain good working relationships with the Department of Labor.
For more information about individual lawyers in the Investment Management group, see our Professionals page.
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Our Clients
Our clients represent a cross-section of the investment management industry. We are currently legal counsel to dozens of investment company complexes that range in size from some of the largest complexes in the United States to small start-up operations. These clients have well over 500 separate investment portfolios and well over $1 trillion in assets. Their shares are sold through virtually every type of distribution channel. In fact, over the last three years, our investment management group has provided representation to investment advisers, distributors, funds, or another affiliates of most of the 50 largest U.S. fund complexes. Globally, the lawyers of K&L Gates are leading the way in assisting clients with investment management strategies in Asia and Europe. Our Taipei office has one of the largest mutual fund practices in Taiwan.
In the alternative investments field, we serve some of the largest public pension plans and foundations in the United States.
Our clients also include the Investment Company Institute (ICI), which is the primary trade association for the investment company industry in the U.S., the U.S. Closed-End Fund Association and the U.S. National Society of Compliance Professionals.
For a detailed description of our practice in particular areas of investment management law, click on the links below.
Alternative Investments
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.
Anti-Money Laundering
Anti-money laundering compliance is an increasingly important issue for business. In the U.S., 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 group 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. This is creating new challenges for U.K. business, on which our London office can advise.
Bank Investment Funds
We 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 with respect to permissible securities and fiduciary activities of banks and bank and financial holding company affiliates. Among other things, we have advised banking clients on:
- The establishment of investment advisory and brokerage affiliates;
- The development of products such as sweep accounts designed to automatically invest deposits in mutual funds, commercial paper and repurchase agreements; and
- Bank common and collective trust funds for retirement plans, taxable participants and endowments and foundations, including organizing, documenting, obtaining regulatory approvals, third-party investment advisory arrangements, multi-bank and closed-end structures, ERISA compliance and prohibited transaction exemptions, bank regulatory compliance (e.g., Regulation 9), and fund modification, reorganization, termination and conversion to mutual funds.
In the U.S., 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.
For more information, please see our Depository Institutions group.
Broker-Dealers
Broker-dealer clients constitute an important 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 things, we advise clients on:
- Registration under federal and state securities laws and, in the U.K., FSA authorization;
- Structuring wrap account and asset allocation programs to comply with applicable regulatory guidelines;
- Financial promotion issues in the U.K.;
- Obtaining exemptive and no-action relief from the SEC;
- Obtaining ERISA exemptive relief from the U.S. Department of Labor;
- Mutual fund distribution issues; and
- Establishing due diligence and compliance procedures.
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.
For more information, please see the Broker-Dealer practice.
Custody, Transfer Agent 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 U.S. 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 with respect to 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 with respect 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.
Enforcement, Litigation and Arbitration
We also have a significant 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.
For more information, please see the description of our Securities Enforcement and Commerical Litigation practice groups.
Employee Benefits
Our 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.
For more information, please see our Benefits / Executive Compensation group .
Hedge Funds and Venture Funds
K&L Gates' Hedge Fund, Venture Fund and Private Fund practice 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.
For more information please see our Hedge Funds and Venture Funds practice.
Insurance Products
K&L Gates' Investment Management group 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:
- Creation of fixed and variable insurance products;
- Negotiating distribution and marketing arrangements;
- Assistance with exemptive and no-action relief and other regulatory interactions with securities and insurance regulators; and
- Ongoing compliance.
Investment Advisers
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:
- Assisting with registration under federal and state laws;
- Structuring new services;
- Preparing and reviewing advisory contracts, customer disclosure documents and contracts with service providers;
- Reviewing and providing advice regarding advertising and marketing materials;
- Assisting clients' compliance with the investment profession's "best practice" standards, including the AIMR performance and soft dollar standards;
- In the U.K., assisting clients with their compliance with the investment profession's best practice standards, including advice as a result of the introduction of the E.U. MiFID directive and changes to the standards for best execution, soft commissions, client order rules, investment research and additional topics.
- Preparing trading practices and compliance procedures and developing compliance systems;
- Ongoing compliance with ERISA, the U.S. Investment Advisers Act of 1940 and state law; and
- In the U.K., advice on FSA Handbook issues, Financial Services & Markets Act 2000, authorizations and change of control applications.
We additionally assist clients in their dealings with regulators, including applying for exemptions and no-action relief, 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.
Investment Companies/Mutual Funds
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:
- Creation of new financial products.
- Marketing, advertising and distribution of investment products and services.
- Corporate governance matters for investment companies, as well as advising fund boards.
- Obtaining routine and unique exemptive, no-action and similar relief from regulators.
- Negotiating, structuring and evaluating the legal dimensions of investments in financial instruments (such as swaps, private placements and variable rate securities, lines of credit and other financing).
- Mergers and acquisitions of money management firms and of investment companies.
- Responding to regulatory issues raised by SEC staff and responding to FSA staff in the U.K. during inspections.
- Representing clients in enforcement investigations and proceedings.
- Developing compliance systems and regulatory controls.
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 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 oblications (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.
Private Funds and Offshore Funds
We have a substantial practice involving the organization and operation of a wide variety of private funds, offshore funds, hedge funds and other types of unregistered funds. These include limited partnerships and limited liability companies that invest in, among other things, other funds, large and small cap equity securities, domestic and foreign securities, mortgage servicing rights, and corporate and government bonds. Our services include:
- Organizing new private and offshore funds;
- Providing assistance with investment advisory agreements and agreements with other service providers and placement agents;
- Assisting with distribution and marketing matters;
- Assisting with regulatory and compliance procedures and other matters;
- Providing legal assistance with investments (including reviewing and negotiating futures agreements, swap agreements, repurchase agreements and other commercial matters); and
- Ongoing compliance.
In London, we have a particular focus on fund vehicles for indirect investment in real estate—such as limited partnerships and Jersey unit trusts.
For more information, please see the Hedge Funds and Venture Funds practice.
Regulatory Compliance
Our 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 U.S., 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 AIMR Performance Presentation and Soft Dollar 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.
For more information please see our Securities Enforcement group .
REITs
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.
For more information please see our Real Estate group.
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 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." These would be joint public/private funding vehicles for small U.K. companies.
For more information please see the Small Business Assistance practice.
State and Municipal Pension 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 advise 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.
Tax
Globally, 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 Group
In the U.S., 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 Group
In 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.
For more information, please see our Tax practice .
U.S. CFTC Regulation
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.