Hedge Funds – Page 3 – Global Investment Law Watch

APAC: Managed Accounts and Conflicts—Part 2: Managed Accounts vs. Commingled Funds

Mar 29 2023

In our last post, we suggested that managed accounts of whatever structure have become more and more popular among institutional investors. Our list included advantages of managed accounts often seen in print or discussed among panel participants in seminars. We did not, however, itemize all of the incentives motivating many institutional investors to prefer managed accounts over commingled funds. We’ll do so now to introduce and illuminate the reasons why and how conflicts of interest are created when fund managers manage separate client accounts alongside commingled funds. And, hopefully, give you some takeaways when managing your own investment management business.

APAC: Managed Accounts and Conflicts – An Overview

Mar 07 2023

By Scott Peterman

Over the last 20 years, managed accounts have become increasingly popular. A managed account is a portfolio of securities managed by a single manager on behalf of a single investor. These special arrangements are especially popular among institutional investor seeking:

More control over investment decisions (positive or negative control; veto rights);
Access to institutional quality investment managers;
Direct ownership of underlying assets;
Better fee terms;
Longer investment horizons; and
Other considerations, such as Sharia compliance, special portfolio “tilts” such as ESG.

Europe: Important Issues Still Open for Debate in EU’s AIFMD and UCITS Reviews

Feb 28 2023

By Giovanni Campi

On 24 January 2023, the ECON Committee of the EU Parliament adopted its report on proposed amendments to the EU’s main fund rules, AIFMD and the UCITS Directive, ahead of trilogue negotiations with the EU Council and Commission set to begin in March. When agreed, the revised Directives are expected to come into force in 2025 in light of the 24 months transposition period. Notable proposals include:

Europe: FCA Sets Ambitious Goal to Improve Asset Management Regulation in the UK

Feb 24 2023

By Robert Lloyd, Maya Ffrench-Adam and Philip Morgan

On 20 February 2023, the FCA published a discussion paper (DP23/2) on improving the UK asset management regime. Key themes include:

Alignment with Relevant International Standards

The FCA does not want to create unnecessary complexity for firms operating in multiple jurisdictions. It aims to develop the regime to interact effectively with international requirements, while promoting the international competitiveness of the UK economy.

United States: SEC Division of Examinations Announces 2023 Examination Priorities

Feb 08 2023

By: Hayley Trahan-Liptak and Anna E. L’Hommedieu

On February 7, 2023, the U.S. Securities and Exchange Commission (SEC) Division of Examinations (the Division) announced its 2023 examination priorities.[1] The timing of the announcement, over a month earlier than the Division’s examination priority announcements in the prior two years, suggests a return to normal following pandemic-era examinations.

United Arab Emirates: SCA Overhauls Regulations Governing Foreign Fund Offerings

Jan 19 2023

By: C. Todd Gibson, Amjad Hussain, and Zaid Abu-Shattal

The Securities and Commodities Authority (“SCA”), the federal financial regulatory agency in the United Arab Emirates (“UAE”) issued on 16 January 2023 a suite of new decisions and regulations, which introduced sweeping changes to the public distribution of foreign funds in the UAE.

Pursuant to SCA Chairman of the Board of Directors Decision No. 4/RM of 2023 Concerning the Procedures of Adjustment of Situation to Promote Units of Foreign Funds in the UAE (“Foreign Funds Regulations”), which came into effect on 17 January 2023, promotion of foreign funds in the UAE is now limited to private distribution to professional investors and/or market counterparties, as defined in the SCA Rulebook. As of today, the updated regulations are only available in Arabic.

Amongst other obligations set out in the Foreign Funds Regulations, promoters of foreign funds in the UAE must amend their arrangements with managers of foreign funds to comply with the provisions of the Foreign Funds Regulations.

The Foreign Funds Regulations state that promoters may continue performing their obligations pursuant to contracts that are still in force for a period not exceeding six months from 1 January 2023 or until the expiration of such contracts (whichever comes first), provided that the registration of the concerned foreign funds are renewed within the transitional period and payment of the prescribed fees are made to the SCA.

The SCA seems to want to encourage global asset managers to set up an onshore presence and establish onshore domestic public or private funds to target investors in the UAE in accordance with the new requirements and processes that were also issued on 16 January 2023 under the SCA Chairman of the Board of Directors Decision No. 1/RM of 2023 on the Regulation of Investment Funds. The SCA also issued decisions with respect to regulations governing the registration of securities for listing purposes, amending certain provisions of the SCA Rulebook, clearing activities in local commodity markets, and SCA services fees.

United States: PCAOB’s Vacating 2021 Determination under HFCAA Lowers the Risk of Delisting

Dec 22 2022

By: Yuki Sako and Michael G. Lee

On 15 December 2022, the Public Company Accounting Oversight Board (PCAOB) announced that it was able to secure complete access to inspect and investigate audit firms in China. From September to November 2022, PCAOB staff members “conducted on-site inspections and investigations in Hong Kong…thoroughly testing all aspects of the agreement necessary to assess whether [Chinese] Authorities would allow complete access.” The PCAOB’s inspections and investigations were pursuant to a written agreement, called the Statement of Protocol, which the PCAOB entered into with Chinese authorities on August 26, 2022. The PCAOB concluded that Chinese authorities “did not obstruct the PCAOB’s ability to inspect and investigate completely, consistent with U.S. law.” Consequently, the PCAOB decided to vacate its previous December 16, 2021 determination, made pursuant to the Holding Foreign Companies Accountable Act (HFCAA), that positions taken by China prevented the PCAOB from inspecting and investigating firms headquartered in mainland China and Hong Kong completely.

United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers

Nov 07 2022

By: Lynn A. Schweinfurth, Kathy Kresch Ingber, and Crystal Liu

On November 2, by a vote of 3 to 2, the Securities and Exchange Commission adopted, largely as proposed, amendments to Form N-PX under the Investment Company Act of 1940 and new Rule 14Ad-1 under the Securities Exchange Act of 1934 (Amendments). The Amendments expand the proxy voting information that registered investment companies (Funds) report on Form N-PX, and require, for the first time, Form 13F filers (Managers) to report annually on Form N-PX how they voted proxies concerning certain shareholder advisory votes on executive compensation (“say-on-pay” votes).

Australia: Australian Government abandons introduction of limited partnership structure

Oct 26 2022

By Kane Barnett

The Australian Government has delivered the 2022-23 Federal Budget. One of the announcements relevant to the investment funds industry was that the Government “has reviewed and will not proceed with … the 2016–17 Budget measure that proposed introducing a new tax and regulatory framework for limited partnership collective investment vehicles”.

Australia: ASIC Provides Practical Guidance as Long Awaited CCIV Arrives

Jun 23 2022

By Kane Barnett and Bernard Sia

ASIC has published Information Sheet 272 (INFO 272) and Report 728 (REP 728) on the eve of the corporate collective investment vehicle’s (CCIV) commencement.

With the commencement date for CCIVs being 1 July 2022, today ASIC released 7 regulatory guides relating to the registration and licensing requirements for CCIVs. We outline the key features of CCIVs in our previous update. INFO 272 provides much needed clarity on how both the CCIV itself and its initial sub-funds are to be registered.

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