Los Angeles partners Fred Reish and Bruce Ashton and Philadelphia partner Gary Ammon co-authored an article for The Hedge Fund Law Report.
In the article, Fred, Bruce and Gary, partners in the Employee Benefits & Executive Compensation Practice Group, analyze the final rule under ERISA §408(b)(2) as it applies to hedge fund managers.
Hedge funds and other alternative investments are growing increasingly popular among ERISA-covered benefit plans, with the U.S. Department of Labor (DOL) reporting that the total amount of assets held by private pension plans increased to about $5.5 trillion by the end of the plans’ 2009 plan years.
But owning 25 percent or more of any class of equity interest in a hedge fund causes the manager of the hedge fund to become a fiduciary under ERISA to the ERISA-covered benefit plan investors, creating a number of issues for “covered” hedge fund managers.
The article discusses issues that will arise as a result of the final rule under ERISA §408(b)(2), including detailed disclosure requirements and dates for compliance, how compensation (direct and indirect) is defined for purposes of the rule, and how changes in the information disclosed are to be reported.