The Law of Private Investment Funds offers lawyers a practical analysis of the legal and regulatory issues that arise from the structure and marketing of private investment funds both from the UK and US perspective. The book opens with a thorough description of the structural elements of private investment funds, including the marketing restrictions and tax constraints to which they are subject. This sets the stage for a discussion of the general legal and regulatory duties of the fund, and its manager. Running throughout the work are the themes of investor protection, and the governance challenge faced by all private investment funds. These ideas are considered in the context of the various sources available for investors to protect their interests during their participation in the fund, including the substantive rights and obligations under general law, and voluntary and statutory rights of regulation. In particular the question of how the integrity of a fiduciary relationship can be maintained with disparate and distant clients is addressed.Against the backdrop of the applicable legal and regulatory duties, the author considers the various aspects of operating private investment funds.
Issues such as structuring and launching, and marketing private investment funds are considered in full. The author also looks at the governance challenge as far as limited partnerships and offshore companies are concerned. The final chapter of the work considers the limits of regulation and takes a practical view of development in the UK and US. Conclusions are drawn about how far regulatory changes can meet the concerns of investors following recent hedge fund scandals.
Table of Contents
1. Introduction to Private Investment Funds; Overview; Terminology; Structural Consideration; Legal and Regulatory Issues; Legal and Fiduciary Duties of the Investment Manager; Regulation of Fund Managers and Funds; Documenting the Fund and the Legal Relationship between the Fund Manager and Investors; Multiple Vehicle Structures; 2. Marketing Private Investment Funds; Overview; Distribution Approaches; Financial Promotion - General Concepts; Exemptions to the Financial Promotion Restrictions; Promotion of Collective Investment Schemes; Consequences of CIS Categorisation; Marketing in the United States; 3. Taxation of Private Investment Funds; Overview; UK Taxation of Limited Partnerships; US Taxation of Limited Partnerships; Effect of Taxation Rules on Structure and Operation of Partnerships; UK Taxation of Offshore Exempt Companies; US Taxation of Offshore Exempt Companies; Effect of Taxation Rules on Structure and Operation of Offshore Companies; 4. The Legal Duties Arising from the Provision of Investment Advisory and Management Services; Overview; Legal Status of the Fund Manager; Common Law Duty of Care in Tort; Contract; Fiduciary Duties; Misrepresentation and Related Claims; Limitations on Duties; 5. The Regulatory Duties Arising from the Provision of Investment Advisory and Management Services; Overview; Regulatory Status of the Fund Manager; FSA Authorisation; SEC Registration; International Organisation; Conflicts of Interest; Insurance; Parameters of Fiduciary Duties in Regulation; 6. Governance Issues in Partnerships Used as Private Investment Funds; Overview; Nature of Partnerships; Partnership Agreements; Powers and Duties of Partners; Duty of Good Faith; Actions Between Partners; Understanding the Fiduciary Challenge in Limited Partnerships; 7. Governance Issues in Offshore Companies Used as Private Investment Funds; Overview; Nature of Limited Companies; Powers and Duties of Directors; Liability of Directors; Duty of Good Faith; Shareholder Actions; Understanding the Fiduciary Challenge in Offshore Companies; 8. Invester Protection Failures in Private Investment Funds; 9. Using Structural Approaches to Address the Governance Challenge; Overview; The Fiduciary Challenge; Parameters of Negotiation; Relationships with Advisers; Relationships with Service Providers; Documenting the Extent of Duties and Obligations; Overcoming the Fiduciary Challenge; 10. The Role of Regulation in Resolving the Governance Challenge; Overview; UK Developments; US Developments; European Developments; International Developments; Future Prospects for Private Investment Funds; The Place of the Fiduciary Challenge in Investment Management; Lessons Learned
Timothy, a New York qualified lawyer and English solicitor, is a partner at Kaye Scholer. He regularly advises sponsors on the formation, structuring and negotiation of a wide variety of regulated and unregulated investment vehicles, as well as the full spectrum of securities and regulatory issues typically associated with such transactions. He has worked on a wide range of funds, including hedge funds, private equity funds, venture capital funds, funds of funds and funds investing in particular countries or sectors. Such vehicles have been formed in numerous jurisdictions, including the United Kingdom, the United States, the Cayman Islands, the Channel Islands, the Isle of Man, Bermuda, Mauritius, the Netherlands, Luxembourg, Germany and Ireland. His clients have included a full range of parties associated with funds - promoters, managers, advisers and investors.