hedge fund advertising law: fundamentals and new developments

Hedge Fund AdvertisingFundamentals and New Developments

Presented by

Mark Diamond Wade Savoy Richard Mooney

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“Reasonable steps” to establish purchasers are accredited investors

What are "reasonable steps?"

Securities Law Issues

Private offering

Section 4(a)(2) of Securities Act of 1933 and Regulation D

JOBS Act

Permits general solicitation and advertising under certain circumstances

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General Solicitation in Hedge Fund Context

- Traditional solicitation methods

one-on-one meetings; third party solicitation agents

- Use of subscription agreements

- CPO requirements

Rule 4.13(a)(3) – "marketing to the public"

- KYC and AML requirements

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Investment Adviser Advertising Rules

General anti-fraud rule

Types of advertising:

TestimonialsPast recommendationsInvestment programs or formulas

Reprinted articles

Client lists

Graphs and charts

Model or hypothetical results

Performance Information

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Types of Advertising (continued)

Prior adviser track record

Composites

Recommendations by regulatory authorities

Seminars and speeches

Websites

Research reports and newsletters

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Disclaimers

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Marketing and Intellectual Property

Trademarks

and Branding

TM R

C SM

False

Advertising

Working with Advertising and Marketing Firms

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Trademarks and Branding

What is a TRADEMARK?

Any word, phrase, symbol, or design that identifies and distinguishes

the source of the goods or services of one party from those of others.

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Walmart

Apple

Charles Schwab

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iPhone Coke Amazon

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What’s in Your Wallet?

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How do I get a TRADEMARK?

USE REGISTRATION

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How do I get a TRADEMARK?

INTERNATIONAL

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How is a TRADEMARK infringed?

CONFUSION

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Similar Names

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Picking a Name

Apple Apple Apple

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Picking a Name

TRADEMARK SEARCHES

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False Advertising

VS

VS

Puffery Substantive Claims

"We're the best""We outperform

the industry"

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False Advertising

PROOF:

Before, Not After

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Working with Advertising and Marketing Firms

Use them for advertising and marketing, not legal advice Ownership of the

materials they create for you

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The Possibilities (for litigation)Are Endless

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Securities Law Litigation

Traditional securities suits

Quick summary Not the focus

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Intellectual Property Litigation

Trademark

TMCopyright

C

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False Advertising

State Laws

Statutory DamagesPotential Class

Action

Proximately Caused Losses

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Other Torts

Fraud

Negligent Misrepresentation

Suppression of Facts

Interference with Contract

Punitive Damages

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Unfair Competition

Many States – Catch All Provision

Generally Very Lax Proof Standard

Injunction, Restitution, Attorney Fees

California New York

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Others

THIS IS AMERICA

Anyone Can Sue Anybody for Anything

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Questions????

Wade [email protected] ext. 237

Richard [email protected]

Mark [email protected] ext. 232

hedge fund advertising law: fundamentals and new developments

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