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Proactive regulatory and compliance advice is core to our client approach. By immersing ourselves in the day-to-day operations of our clients' businesses, we provide ongoing, actionable, and effective compliance solutions. We are in the trenches with the GCs, CCOs, COOs, and CFOs, making their priorities our priorities.
We firmly believe that careful planning can avert potential problems that could distract our clients from managing their businesses, or even lead to regulatory or enforcement action.
We anticipate changes in regulatory focus and provide real-time, practical advice and guidance. When necessary, we also work closely with our enforcement defense team, including a number of former federal prosecutors, to address potential issues before they become real problems, mitigate impact, and provide successful outcomes.
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Max Karpel, Ted Randolph, and Brian A. Silikovitz were mentioned in The Deal as legal counsel to Irenic Capital Management LP in an article on the agreement to acquire Arconic Corp. (ARNC), a transaction in which affiliates of Irenic were minority investors. The transaction was also reported on by Reuters, The Wall Street Journal, MarketWatch, Associated Press, and Barron’s, among others. (subscription required to access The Deal article).
Hedge Fund Law Report explores the results of Lowenstein’s third annual report on alternative data in an article detailing how nine-in-ten alternative asset managers “now use alternative data or plan to use it in the coming year, and a solid majority increased their use of alternative data in 2021 and 2022 when compared with 2020.” The report was authored by Scott H. Moss, Chair of Lowenstein’s Fund Regulatory & Compliance practice; Boris Liberman, Co-Chair of the firm’s Derivatives & Structured Products practice; and George Danenhauer, counsel in the firm’s Investment Management group. (subscription required to access article).
Scott H. Moss, Chair of Lowenstein’s Fund Regulatory & Compliance practice, talks to Regulatory Compliance Watch about the new SEC FAQ requiring that advertising about “extracted performance” show both gross and net returns; he advises fund managers to “disclose the heck out of” how they define and calculate ‘net.’ (subscription required to access article)
Investment Executive examines the findings and summarizes key points from Lowenstein’s recent survey on alternative data, which notes that hedge funds have been using alternative data for more than a decade but adoption has increased in recent years, in part because investors sought to gauge the pandemic’s real-time impact on the economy and company profits.
Lowenstein's survey report is also highlighted in Pensions & Investments, Inside Big Data, Advisor's Edge, and AnalyticsIQ.
CIO references Lowenstein Sandler’s recent report on alternative data that found that “92% of investment organizations, from hedge funds and private equity to venture capital, are using alt data to a moderate or significant extent to inform decision making. [The survey’s] respondents also expect their use of alt data to increase through 2022.” CIO further notes that, according to the Lowenstein survey, vendor selection costs were users’ primary concern, as well as “the lack of tools and techniques to store alt data.”
This article also appears in TekDeeps.
Partners from Lowenstein Sandler's Investment Management Group discuss the App Annie case and its impact on hedge funds that use alternative data on Eagle Alpha’s Q4 podcast. They advise funds to follow three steps to establish sufficient due diligence in case the SEC makes an inquiry: “1) Make sure you send out a good DDQ; 2) Have a thorough follow up call, ask a lot of questions about data provenance, and memorialize it; and 3) Negotiate an agreement with robust reps and warranties about data provenance…that’s best practices.” They also make two predictions: “We’re going to see more [SEC] inquiries from managers who use data in their investment processes; and we will continue to see proliferation of utilization of this kind of data in the investment process.”
In Risk.net, Scott H. Moss, Co-Chair of Lowenstein’s Fund Regulatory & Compliance practice, addresses the increased risk of lawsuits to hedge funds under proposed changes to SEC negligence rules.
Insights from Scott H. Moss, partner and co-chair of the firm’s Fund Regulatory & Compliance practice, and Eileen Overbaugh, partner in the firm’s Investment Management group, are featured in a two-part article in Hedge Fund Law Report. Moss and Overbaugh address cybersecurity, business continuity plans, branch offices and disclosures under new Securities & Exchange Commission (SEC) Chairman Gary Gensler, as well as the use of the word “may” in disclosures, conflicts of interest-related issues, cross-trades and principal transactions, insider trading, responsible investing, and exams of new advisers. Moss recommends that fund managers perform risk assessments and conflicts assessments immediately, especially with regard to cybersecurity concerns as advisors continue to work increasingly from home. Cybersecurity is now absolutely essential and “permeates the very existence of every single registered investment adviser,” Moss says.
Peter Greene, Vice Chair of Lowenstein Sandler’s Investment Management group, talks to FundFire about the recent enforcement action by the U.S. Securities and Exchange Commission (SEC) against alternative data vendor App Annie. He notes that the company’s $10 million settlement with the government “follows signaling from the SEC over two years that alternative data would be a priority for the regulator.” Greene says that hedge fund managers must ask: “Is every link in the chain – the original owner, user of the app’s data, all the way through to the hedge fund, is every link pure? And by pure, does every party prior to you have the right to disclose that data?” He adds, “I think the concern is next time the SEC finds a rogue vendor or actor that we can’t be so sure the managers, hedge fund customers, won’t be implicated as well.”
Peter Greene, Vice Chair of Lowenstein’s Investment Management group, talks to FundFire about increased investing by hedge funds in private companies through various structures. Greene says, “We are seeing a ton of it – a lot of traditional hedge fund managers are starting to look at privates more and more than in the past.”
In an HFM article on the increasing popularity of hybrid public/private funds, partner Benjamin Kozinn of the Investment Management group discusses how to structure these funds and their fees, as well as how to mitigate compliance risks. “One approach is to have opt-in opt-out structures where the investor elects whether they want to allocate a portion of their capital (e.g., 10%, 20%) to privates. In the opt-in/out model, whether you actually invest in privates becomes a function of how many people opted in or opted out,” Kozinn says. He adds that one common approach with these funds is to charge a lower management fee and a higher incentive fee: “Maybe you don’t have to worry about portfolio risk management every day as you would with public markets, but the costs and the complexity of private investments can be higher than public investments.” Kozinn also warns of possible MNPI (Material Nonpublic Information) issues with these structures: “If a private company you are invested in is getting bought by a public company, or it is entering into a significant commercial arrangement with a public company, the manager is potentially walking into MNPI problems if you don’t have a physical separation and appropriate information barriers between the private and public investment teams.” (subscription required to access article)
Hedge Fund Law Report interviews Boris Liberman, partner in Lowenstein’s Investment Management group, about his recent move to the firm from AQR Capital Management LLC, where he served as Senior Counsel. Liberman brings to Lowenstein his deep experience advising U.S. and international hedge funds, mutual funds, managed accounts, sovereign wealth funds, and other asset owners on all aspects of implementing their investment and trading strategies. He predicts that in the next two years, “a much larger number of buy-side entities will be in scope of the (regulatory initial margin) framework and will need to be in compliance if they want to continue with their OTC trading activity.”
Ethan L. Silver, Chair of the firm's Broker-Dealer practice, comments in Law360 on the Securities & Exchange Commission’s (SEC) proposed exemptions that would allow unregistered “finders” to be compensated for private fundraising activities. Silver says that finders not subject to broker-dealer compliance regulations might be difficult to manage, while “registered broker-dealers, on the other hand, are expected to behave in compliance with regulations because of the threat of an exam, the regulator coming in and examining you, or a supervisor or manager holding you accountable for your behavior.”
Lowenstein Sandler counsel Robert J. Menendez, Jr.'s nomination by New Jersey Governor Phil Murphy to the Board of Commissioners of the Port Authority of New York and New Jersey is noted in Law360, NJ.com, ROI-NJ, NJBIZ, NorthJersey.com, NBC New York, the Daily Record, Hudson TV, and Hudson County View. Governor Murphy’s official announcement can be read here. (subscription required to access article) View Lowenstein's news announcement about this nomination.
Boris Liberman's arrival to Lowenstein Sandler as a partner in the Investment Management group is noted in Bloomberg Law, General Counsel News, The Daily Docket, and Law.com (New York Law Journal). View Lowenstein's news announcement about Liberman's arrival to the firm.
Benjamin Kozinn recently participated in a webinar on valuation presented by the Hedge Fund Law Report; its points are summarized in this article. Kozinn comments on valuation challenges; valuation frequency, processes, and governance; valuation committees and third-party valuation agents; and the impacts of the coronavirus pandemic on valuation. He notes that “the effect of the coronavirus pandemic has been relatively mild [on asset valuation]. … Market disruptions have been fairly short-lived. Advisers have been revisiting their valuation policies and speaking with their auditors.”
ALLAboutAlpha references Lowenstein Sandler’s survey report, Alternative Data = Better Investment Strategies, But Not Without Concerns, authored by Peter Greene with contributions from Ben Kozinn, in an article discussing the relevant use and applications of alt data for FinServ firms in the midst of the COVID-19 pandemic. The article cites the report’s findings that 98 percent of hedge funds surveyed use alt data in combination with fundamental analysis to make informed investment decisions.
Peter Greene, partner and Vice Chair of Lowenstein’s Investment Management group, is quoted in Alternatives Watch addressing the increased risk of insider trading and the importance of compliance monitoring for hedge fund employees working from home during the COVID-19 pandemic.
Lowenstein's representation of W2O, the leading independent provider of analytics-driven, digital-first marketing communications to the health care sector, in the acquisition of Arcus Medica, a recognized leader in medical and scientific communications, highlighted in the Global Legal Chronicle. The Lowenstein deal team included David L. Goret, Marita A. Makinen, Andrew P. Erdmann, Matthew Tippy, Eugene R. Cheval, Tracy F. Buffer, Michael Walutes, Sophia Mokotoff, Megan Monson, Matt Savare, Bryan Sterba, Mary J. Hildebrand, Manali Joglekar, Carly S. Penner, Amy Komoroski Wiwi, and James C. Shehan. View Lowenstein's news announcement about this transaction.
Benjamin Kozinn discusses the Securities Exchange Commission’s Regulatory Flexibility Agenda and addresses essential takeaways for private fund managers in the Private Equity Law Report.
The release of Lowenstein’s research report, Alternative Data = Better Investment Strategies, But Not Without Concerns, by Peter D. Greene (with contributions from Benjamin Kozinn) was noted by Hedgeweek, Business Wire, Opalesque, the Managed Funds Association newsletter, Institutional Investor, Associated Press, Yahoo! Finance, StreetInsider.com, Chief Investment Officer, Business Insider, LexBlog, and Bloomberg Law. The report found that over 80 percent of hedge funds are using alternative data in some capacity and that 90 percent of survey respondents who use alternative data utilize it in combination with fundamental analysis to make investment decisions. View Lowenstein’s news announcement about the report.
Benjamin Kozinn examines the Securities and Exchange Commission’s Regulatory Flexibility Agenda and highlights important takeaways for private fund managers, in the Hedge Fund Law Report.
Ethan L. Silver is quoted in The Wall Street Journal discussing concerns by the Securities and Exchange Commission surrounding digital-securities firms and their ability to safeguard investors’ funds and assets. (subscription required to access article)
The launch of Lowenstein’s partnership with Eagle Alpha to meet the legal and compliance services associated with the use of alternative data by hedge funds is featured in The Associated Press, Hedgeweek and Yahoo! Finance, quoting Peter D. Greene: “Our new initiative with Eagle Alpha is a great opportunity to address the hedge fund industry’s concerns with respect to alternative data, and to do so on a variety of platforms …. We look forward to elevating our level of support to the fund community.” View Lowenstein's news announcement about this collaboration.
Ethan L. Silver is quoted in Financial Planning discussing the Securities Exchange Commission’s increased enforcement of regulations for robo-advisory firms. Silver affirms the necessity of strong, ongoing compliance programs as a key to minimizing the risk of penalization. He stresses the importance of firms to enhance disclosures and limit claims on social media, to ensure that they are “delivering on what was promised through marketing channels.”
Ethan L. Silver is quoted in InvestmentNews addressing cryptocurrency market manipulation and custody as it relates to the possibility of a crypto-ETF entering the market in 2019. Silver states that the challenge for the SEC is how to integrate this new technology into the existing SEC rules.
Forbes quotes partner Peter D. Greene in an article discussing the latest Google data hijack and correlating trends of misuse of data. Greene notes the careful manner in which buy-side shops approach provenance of alternative data. The article also highlights Greene’s recent panel participation, “Media StartUps In A Post Cambridge Analytica Era,” which focused on innovation around data protection.
The Hedge Fund Law Report conducts an in-depth interview with Peter D. Greene regarding the GDPR’s impact on private funds’ use of alternative data. Issues addressed include how the GDPR might affect how funds buy and use alternative data; how the GDPR may impact funds’ internal generation or gathering of alternative data; funds’ due diligence in data vendor selection; and immediate steps funds can take to ensure GDPR compliance.
In a three-part article, the Hedge Fund Law Report quotes Peter D. Greene and Benjamin Kozinn regarding fund managers’ collection (often through vendors) and use of big data, liability risks associated with acquisition and use of material nonpublic information, and data privacy issues surrounding access to and use of personally identifiable information.
