We have substantial experience organizing and advising with respect to: funds registered under the Investment Company Act of 1940 (mutual funds and registered closed-end funds); hedge funds (specializing in all investment strategies and instruments, including debt, equity, derivatives, foreign currencies, commodities, structured finance securities and combinations of the foregoing); commodity pools; exchange-traded funds (ETFs); private equity and venture capital funds; real estate funds and REITs; hedge fund and private equity funds of funds (both unregistered and registered under the Investment Company Act); business development companies; and employees’ securities companies.
Our advice also covers the broad scope of legal and compliance issues that are faced by funds, their advisers and their boards under the laws and regulations of the various jurisdictions in which they operate. In particular, we advise our clients regarding complex federal and state laws and regulations governing securities, funds and advisers, including the Dodd-Frank Act, the Investment Company Act, the Investment Advisers Act of 1940, the Securities Act of 1933, the Securities Exchange Act of 1934, the Commodity Exchange Act, the USA PATRIOT Act and comparable laws in non-U.S. jurisdictions. We are also often asked to analyze and resolve issues regarding the availability of an exemption or other basis for avoiding registration under the Investment Company Act or the Investment Advisers Act.
“Widely acclaimed for its extensive experience in hedge fund matters, Sidley Austin boasts an impressive international reach through its established presence in New York, London and Hong Kong, alongside broader resources in Europe, Latin America and the Middle East.”
Chambers Global 2021
In the 2021 edition of Chambers USA, Chambers Global, Chambers UK and Chambers Asia Pacific, over 22 Sidley lawyers were listed as “notable practitioners” for their work in Investment Funds.
- Sidley was named “Law Firm of the Year” for its Private Funds/Hedge Funds practices in the 2021 U.S. News – Best Lawyers “Best Law Firms” survey, published by U.S. News & World Report, and has had the most national rankings (across all tiers) in every edition since the survey’s debut 11 years ago.
- Sidley is recognized as a Top Tier Investment Funds: Hedge Funds firm by Chambers USA and Chambers Global (2013 – 2021).
- Chambers Asia Pacific, China and Singapore recognize Sidley as a Top Tier Investment Funds firm (2013 – 2021).
- Chambers Global 2021 recognizes Sidley as a Top Tier Funds & Asset Management (International & Cross-Border) firm.
- Sidley was named “Best Law Firm for Asset Management” by AsianInvestor in 2020.
For decades Sidley has had a strong commitment to, and has been a recognized leader in, counseling traditional and alternative asset managers.
We represent hundreds of investment advisers, commodity pool operators, commodity trading advisors and mutual fund boards of directors, including some of the most prominent names in alternative and traditional asset management. We also regularly counsel start-up managers—and those seeding them—regarding the structuring of their businesses and funds. We have advised with respect to thousands of registered and unregistered funds in virtually every financial center in the world.
We have organized funds for, and provide ongoing representation to, hundreds of hedge fund managers. Our hedge fund clients utilize a wide variety of investment strategies executed in the equities, fixed income and derivatives markets.
We provide a full range of legal services to our hedge fund clients, including advice on legal structure and other formation issues (including master-feeder, side-by-side and umbrella fund structures), securities and derivatives regulatory matters, business term alternatives, marketing arrangements, trading documentation, exchange listing, blue sky requirements, internet usage and tax and ERISA matters. In addition, we regularly counsel hedge fund managers regarding their regulatory and compliance obligations.
Sidley has one of the world’s premier commodity pool practices. We assisted our clients in developing some of the first public commodity pools in the 1970s. Since then, we have organized and provided ongoing representation to hundreds of publicly offered and privately placed commodity pools and their commodity pool operators and commodity trading advisors.
We provide a full range of legal services to our commodity pool clients, including those types noted above in respect of hedge funds.
Reports by The American Lawyer rank Sidley among the leading U.S. law firms that represent mutual funds (based on assets under management). We have more than 40 years of experience advising clients with respect to the myriad regulations applicable to registered funds. Our representation of registered investment companies dates back to the tremendous surge in popularity of mutual funds in the 1970s, and today a significant portion of our practice is dedicated to ongoing representation of registered open-end and closed-end funds as well as the boards that supervise them. As the registered fund industry has grown and transformed, we have kept pace with all aspects of new product development and regulation.
Sidley lawyers have been involved in offerings by ETFs that are registered as investment companies and commodity pools, including the first commodity pool to be listed on a securities exchange in the United States. Our work includes preparation of registration statements, “no action” relief work before the CFTC and SEC in connection with both regulatory requirements and securities exchange listing and trading requirements, 19b-4 stock exchange listing applications, short sales relief and disclosure and reporting requirements.
We have represented various U.S. and non-U.S. insurance organizations, fund managers and investment banks in connection with the structuring, establishment and funding of insurance-linked instruments funds covering a variety of strategies, including those related to the use of third-party capital. Given our extensive experience with insurance-linked funds (and other esoteric and hybrid asset classes), we can efficiently advise clients regarding various features such as “side pockets,” slow-pay provisions and liquidating payments. Similarly, given our experience with reinsurance organizations that have related fund management platforms, we can efficiently advise on conflicts/moral hazard/business opportunity allocation issues, as well as on issues such as the effect that receiving material non-public information in a reinsurance business can have on the ability to purchase and sell catastrophe bonds on the fund platform. Our Insurance and Financial Services group lawyers also have deep experience representing offshore clients in a variety of insurance-linked securities transactions.
Sidley has represented the Securities Industry and Financial Markets Association (SIFMA) regarding the Volcker Rule as it applies to securitization and insurance-linked securities transactions and regarding how commodity pool regulations apply to insurance-linked securities transactions.
Private Equity and Venture Capital Funds
Sidley regularly advises clients on the structuring, organization and offering of private equity and venture capital funds, and fund of funds transactions, including traditional leveraged buyout and start-up funds, as well as funds structured around specific investment products such as real estate and energy companies.
We provide a full range of legal services to our private equity and venture capital fund clients, including advice on regulatory matters, choice of jurisdictions, choice of entity forms, business term alternatives, marketing arrangements and tax and ERISA matters.
Together with the firm’s corporate group, we represent our private equity and venture capital fund clients in connection with the structuring and documentation of their investments in portfolio companies.
We also provide advice on complex tax, intellectual property, litigation, corporate, financing, bankruptcy and environmental matters relating to these transactions.
Sidley provides a full range of legal services to our private real estate fund clients, including fund structure and formation issues, business term alternatives, tax and ERISA analyses, marketing arrangements, securities regulatory matters and GP structure and formation issues.
We have experience in forming traditional, committed capital private real estate funds, real estate-related hedge funds, open-end private real estate funds and SEC-registered real estate funds. In connection with our private real estate fund work, we work extensively with sponsors in their GP structuring, including joint ventures. We have represented many sponsors in private real estate fund formation, including Canyon, Clifford Capital, Deutsche Bank/RREEF, Starwood, Madison Capital, Marathon and Merrill Lynch. We also represent institutional clients, including foreign governments and instrumentalities, state pension plans, college endowments, corporate clients and family offices in connection with significant investments in these funds. We have represented many of these clients in their portfolio investment transactional work subsequent to fund formation. In this regard, recently we have been active on behalf of private real estate funds in structuring and executing real estate transactions outside of the United States, particularly in Europe. We have been active in forming REITs as vehicles on behalf of real estate funds for real estate investment in the United States. We also represent placement agents in their private real estate fund offerings.
Our commitment to client service, capital markets dominance and M&A successes distinguishes our work in the REIT industry. Sidley is consistently ranked by The American Lawyer as one of the top counsels in REIT securities offerings. These rankings recognize a tradition of consistent leadership by Sidley in the REIT area.
Over the past 1, 3, 5, 7 and 10 year periods, we have acted as counsel for more REIT offerings than any other firm, serving as counsel in 368 REIT offerings with a value of nearly $124 billion. During the period 2013 - 2014, we were counsel on 128 of the 443 public capital markets offerings by REITs.
We have organized and provide ongoing representation to hundreds of funds of funds and their managers. Our funds of funds clients range from those who are involved with broad-based, multi-strategy and multi-manager funds to funds with more focused funds tailored to specific strategies with a smaller number of managers.
We provide a full range of legal services to our funds of funds clients, including advice on legal structure and other formation issues, securities and derivatives regulatory matters, business term alternatives, marketing arrangements, trading documentation, exchange listing, internet usage and tax and ERISA matters. We also advise with respect to credit facilities and derivatives and exchange-traded overlay programs (such as portable alpha programs) and other structures.
Regulation and Compliance
Sidley advises U.S. and non-U.S. investment advisers in matters involving the Investment Company Act of 1940, the Commodity Exchange Act, the Investment Advisers Act of 1940, the USA PATRIOT Act and the Employee Retirement Income Security Act (ERISA). Non-U.S. adviser clients often request guidance relating to questions involving the extraterritorial scope of the Advisers Act and the Commodity Exchange Act.
We also counsel investment advisers in all phases of their businesses and on all aspects of organization, registration and compliance, including the Securities Act of 1933, the Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934, the Gramm-Leach-Bliley Act and the Commodity Futures Modernization Act of 2000.
We advise unregistered advisory firms with respect to the availability and scope of the exemptions from registration under the Advisers Act, such as exemptions for banks, broker-dealers, accountants and advisers with a limited client base.
Sidley regularly represents buyers, sellers, investors and management teams in a wide variety of merger and acquisition, minority interest, seed capital, spin-out, joint venture and other transactions. The breadth of our experience enables us to handle the full range of issues relating to these transactions, including overall deal structuring, structuring of management compensation programs, ongoing governance arrangements, tax planning, diligence and regulatory work. Given the nature of investment management business, these transactions often involve earn-outs or other contingent payment terms, significant management compensation and retention programs and important governance issues that require thoughtful structuring from an economic, governance, tax and human resources standpoint to meet the objectives of the parties.
Sidley is uniquely positioned to serve as counsel for IPOs by alternative asset managers due to our investment management industry experience and leadership, capital markets presence and public company client service. We advise investment managers on all aspects of such transactions, including issues relating to public company transparency, holding company structure, shareholders and principals, tax and accounting. Sidley represented the underwriters in the IPO of Fortress Investment Group LLC (NYSE:FIG) and represented Citadel in establishing its $2 billion Rule 144A Medium-Term Note program.
Sidley regularly advises clients on a broad range of innovative structured products in the investment management industry, including credit enhanced funds (including guarantee, letter of credit and other credit enhancement structures), commodity and fund linked notes (both rated and unrated), participation arrangements, equity swaps on funds and indices and collateral debt obligation pools.
Sidley frequently represents hedge fund managers, financial institutions and investors in a broad variety of derivatives transactions, including “repackagings,” structured derivatives, total return swaps, futures, options, private equity CDOs (collateralized fund obligations or CFOs), credit derivatives and synthetic CDOs.
Issues addressed in repackaged securities, structured derivatives and credit derivative transactions have included disclosure requirements, broker-dealer questions and other securities law issues, withholding tax, insurance excise tax and insurance entity-level taxes, bankruptcy or insolvency issues, accounting treatment and pension and insurance regulatory requirements. These issues are generally encountered in a cross-border context in which, through our presence in London, New York, Hong Kong, Chicago and Tokyo, we are positioned to bring cutting-edge experience to bear on behalf of our clients.
Sidley represents securities, futures and options exchanges and clearing organizations in connection with their regulatory and transactional matters.
Representative transactions include obtaining contract market designation and derivatives clearing organization status for a start-up futures exchange, assisting foreign futures exchanges in obtaining approval to place terminals in the United States and to offer non-U.S. futures contracts on stock indexes to U.S. investors, representation of a national securities exchange in connection with its securities listings programs and other matters involving both federal and state securities laws.
Sidley provides general corporate representation to a broad range of participants in the financial services and asset management industries, including investment advisers, broker-dealers, commodity pool operators, commodity trading advisors and futures commission merchants.
We advise clients on the formation and structuring of their businesses, internal governance, registration and other regulatory matters, marketing of their products, acquisitions and investments, internet issues, intellectual property protection, arrangements with various service providers and tax and estate planning.
In addition, we represent financial institutions in their roles as placement agents in connection with offerings of investment products.
We advise institutional investors, including state pension plans, funds of hedge funds, foreign investors (including foreign governmental entities), college endowments and corporate clients, in connection with their negotiated investments in private equity and venture capital funds, hedge funds and structured investment transactions.
Sidley has extensive experience defending hedge funds and their advisers in securities enforcement matters before the SEC and other regulators. At Sidley, our clients can rely on the talents of veteran securities enforcement litigators, including several former senior enforcement officials from the SEC. Sidley lawyers have defended hedge funds in numerous SEC, NYSE and New York Attorney General investigations.
Sidley’s enforcement defense lawyers work with lawyers in Sidley’s Investment Funds, Advisers and Derivatives practice to provide preventative counseling. Sidley frequently counsels hedge fund advisers concerning issues that present particular enforcement risk such as insider trading, information barriers, use of outside consultants, alleged manipulative practices, short sales and supervision.
In China, the fund industry has entered a period of unprecedented growth. China has committed to opening the fund management industry sector to foreign competition and many significant economic and regulatory reforms have already been implemented. Our investment funds team assist clients with respect to:
- the options available when seeking to enter the China market, whether via a joint venture with a domestic Chinese firm or by acquiring a stake in an existing Chinese institution, together with related advice concerning the relevant approval process;
- the manner in which fund products can be developed, launched and distributed within the China market;
- the establishment of China-focused investment funds that are denominated in renminbi (RMB) and offered to Chinese or global investors. Our team has acted on a range of matters related to the development of private equity focused domestic RMB funds and on many of the first retail fund offerings denominated in RMB to be registered in Hong Kong;
- advising on how various funds (organized domestically or in foreign markets) can be marketed in the China market; and
- advising as to the Qualified Domestic Limited Partner program (QDLP) being launched by the Shanghai Financial Services Office that will permit foreign hedge funds to be offered within the China market for the first time.