Bingham has an internationally recognized hedge fund practice that counsels a broad spectrum of hedge funds, funds of funds and other pooled investment vehicles, together with their management firms and investors, both in the United States and abroad. The practice is a key part of Bingham’s Investment Management Practice Group and its Financial Services Area, which deploys lawyers serving a wide range of money managers and other financial services firms.
As the hedge fund industry continues to grow, funds are venturing into new asset classes while regulatory and investor scrutiny of hedge funds intensifies. Many fund managers are outgrowing their traditional legal advisers. These managers are asking new questions and grappling with laws and business practices that never before appeared on their radar. They now demand a full-service law firm that can handle all their legal work — no matter how complex.
We offer a top-tier traditional hedge fund practice backed by the resources of an international law firm.
Hedge funds need practical guidance on increasingly complex market-regulation issues, including rules on short sales, soft dollars, margin, best execution and conflicts of interest. We field one of the top market regulation teams, including many former senior lawyers from the SEC, FSA and FINRA.
- Counterparty risk has soared in the last couple of years. Bingham’s insolvency practice is one of the world’s leading practices with experienced lawyers who have assisted hedge fund clients in protecting themselves and their investors should a counterparty face insolvency.
- Many hedge funds face a liquidity squeeze between portfolio holdings that cannot be converted to cash and investor redemption requests. We offer the full range of corporate, tax and other legal skills to successfully manage difficult situations as well as wealth of experience in strategies from surefooted lawyers.
- Funds that deploy complicated derivative strategies need clear advice on the risks and tax consequences of these strategies. We have full-service derivatives and tax practices.
- More hedge funds pursue activist strategies seeking to influence or change management of portfolio companies. Bingham’s market regulation authorities guide clients through the minefield of proxy, reporting, takeover and other regulations that apply to these strategies.
- As the hedge fund market grows more crowded and competitive, managers must often act aggressively to protect their trademarks and other intellectual property. We have skilled IP lawyers ready to protect our clients’ intellectual property.
- More hedge funds face federal and state regulatory examinations, investigations and proceedings than ever before. Some of the most experienced securities enforcement and litigation lawyers in the United States, including many former regulators, are members of our firm.
- Hedge fund advisers need compliance policies and procedures tailored to meet their specialized structures and investment strategies. Bingham has designed compliance programs for both industry leaders and new startups with a focus on procedures that work in the real world.
- Funds that venture overseas face the often harsh and unpredictable rules of the Office of Foreign Assets Control and the Foreign Corrupt Practices Act. We are recognized in the legal industry as being leaders in these complex fields.
Our hedge fund clients range from industry leaders to startups. We represent a wide array of prominent fund managers, utilizing long-short, quantitative, global macro, arbitrage, long-only, event-driven, distressed asset, multi-manager, special situations, activist and international strategies. Our fund manager clients are based throughout the United States and overseas financial centers. We also represent funds of funds managers and hedge fund service providers, including prime brokers, administrators and lenders.
We counsel fund manager clients on all phases of their firms’ life cycles, including:
- Designing innovative structures for funds and management companies that are tax-efficient, regulatory-compliant and consistent with industry best practices
- Negotiating arrangements with strategic investors, placement agents and other gatekeepers
- Reviewing investor presentations and marketing materials
- Structuring creative employment and incentive arrangements
- Dealing with the problems that arise when counterparties become insolvent; portfolio holdings become illiquid and investors head for the exits
- Providing guidance on market regulation, ERISA and other regulatory issues
- Establishing co-investment, side-car, “friends and family” and other parallel vehicles
- Advising on regulatory compliance, including handling regulatory filings and conducting mock inspections
- Applying for trademarks and other protection for firm names and intellectual property
- Coordinating teams of international professionals for cutting-edge global structures
We advise hedge fund investors, including funds of funds, public and private pension plans, educational institutions, other nonprofit organizations, family offices and major financial houses. We design structures to meet the special tax, transparency, governance and regulatory concerns of institutional investors. Our sensitivity to these concerns also drives our advice to fund manager clients on structures designed to attract institutional investment.
Our client base gives us a broad perspective on the hedge fund industry that enables us to provide up-to-the-second advice on industry trends, counsel our clients on current market terms, and deliver documents and structures that are cutting-edge.
Our reputation for creativity and innovative structuring is longstanding and has been built over the years by designing funds to meet the increasingly complex business, tax and regulatory requirements of U.S. and non-U.S. investors. Our lawyers pioneered the now common master/feeder structure. We have also developed multi-tier, offshore and other sophisticated organizational structures to take full advantage of international tax treaties, defer realization of taxable income, shield U.S. tax-exempt investors from UBTI and achieve other tax efficiencies.
The hedge fund industry has gone global as funds and fund managers seek new investors and new investments overseas. With international opportunities come new legal challenges, and Bingham’s hedge fund practice is ready for the task:
- With offices in the money-centers of Europe and Asia, Bingham has the personnel and facilities on the ground to support our clients in Asian and European markets.
- Bingham is a leader in organizing funds to invest in developing markets, especially funds to invest in India and the Middle East. Since 2005 we have assisted with the launch of more than 50 Indian funds.
- We opened our first office outside the U.S. almost 40 years ago. We have represented hedge fund managers throughout Europe, the Middle East and Asia for many years. Grounded in this experience, our advice on international matters is sure-footed, practical and effective.
- We have, and continue to represent, approximately half of the London-listed closed-end funds of hedge funds by market capitalization, including the world’s largest exchange-traded fund of hedge funds.