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Investment Management & Securities

Navigating the increased regulation of the financial services industry that followed the global financial crisis of 2008 continues to be a major concern for broker-dealers. To succeed, they must rely heavily on their lawyers to assist with the seemingly endless array of regulatory, corporate, and compliance matters that can arise suddenly in this evolving area of the law.

Why McCarter?
The Investment Management & Securities Industry group offers innovative solutions for investment companies, private funds, investment advisers, broker-dealers, and banks, both foreign and domestic. Our interdisciplinary team comprises lawyers intimately involved in the industry, many via first-hand transactional and regulatory experience inside the types of companies they now serve. We combine constant attention to current events with an institutional memory of regulations past to offer a balanced perspective on the potential impact of SEC enforcement actions, proper scope of exemptive rules or required compliance procedures, and even the extent to which an industry best practice is appropriate in the context of a particular fund, management organization, or market participant.

Investment Management
We advise on the drafting and negotiation of investment management, sub-advisory, solicitation, market data and electronic trading system agreements, among others, as well as the panoply of required policies and procedures. The team counsels investment managers on responses to regulatory inspections and disciplinary and enforcement proceedings.

Investment Adviser & Broker Dealer Regulation
McCarter represents investment advisers, broker-dealers, banks and funds in all aspects of their businesses, including:

  • Formation of investment companies under the Investment Company Act of 1940, as amended
  • Formation of broker-dealers and investment advisers and registration with the SEC, FINRA and state regulatory authorities
  • SEC, FINRA and state regulatory compliance
  • International regulatory advice
  • Advice on fraud and risk mitigation practices
  • Anti-money laundering best practices
  • Product development and related strategic initiatives
  • Formation, distribution and operation of alternative investment vehicles, including registered alternative investment funds, funds of funds and offshore funds
  • Proxy rules in M&A transactions
  • Securities offerings covered by the Securities Act of 1933 (e.g., Sections 5 and 10, various provisions of Regulation C)
  • Private offerings and exempt securities covered by the Securities Exchange Act of 1934 (e.g., 10b-5 and related)
  • Institutional investor fiduciary issues including socially responsible investing, due diligence/ delegation, investment assessment, tax issues underlying investment in pooled vehicles onshore and offshore, donor-advised funds, and status under securities regulations
  • ERISA-prohibited transactions as applicable to registered investment firms, unregistered funds and IRAs (e.g., IRC 4975) – distribution issues, IRC Subchapter M, partnership accounting, accounting/tax related to commodities/swaps and similar derivatives, applicability of tax treaties, UBIT, etc., and taxation of pensions/nonprofits
  • Regulation of electronic communications networks (ECNs) and alternative trading systems (ATSs)
  • Business structures including limited liability companies, series companies, Delaware and Massachusetts business trusts, trusts, offshore jurisdictions (e.g., Cayman Islands, Bermuda, Virgin Islands, etc.)
  • Contract review/negotiation with respect to nonsolicitation, network security, privacy and confidentiality, anti-money laundering issues and audit engagement
  • Review of documentation related to investment instruments (e.g., ISDA, swap, trust indentures and other trust instruments)
  • Service as special counsel or independent compliance consultant in structuring compliance programs, mock audits and related internal monitoring programs
  • Clearing and prime brokerage issues
  • Day-to-day operational issues associated with regulated entities

Hedge Funds
Our group represents hedge funds, investment managers and investors in industry-specific matters arising from redemptions, liquidations, disputes under investment partnership agreements, regulatory issues, and the engagement and departure of key personnel.

Mezzanine Finance
We know the lending business. From investment to exit, we are prepared to structure transactions, negotiate terms and document deals to achieve the appropriate balance of risk and reward. Our clients regularly include:

  • Mezzanine funds
  • Bank-affiliated private equity and mezzanine groups
  • Institutional investors
  • Banks and bank holding companies
  • Business development companies
  • Corporate strategic investment programs
  • Insurance companies

The scope of our practice enables us to better understand the objectives of both borrowers and lenders, identify viable opportunities, and negotiate any side of a transaction. We handle private equity and leveraged buyout matters, counseling on the myriad legal, tax and business issues that arise in complex financings.

Our mezzanine representation encompasses:

  • Structuring complex mezzanine financings
  • Bridge financings
  • Management buyouts
  • Debt and equity restructuring
  • Recapitalizations
  • Portfolio purchases and sales
  • Add-on acquisitions
  • Initial public offerings

McCarter’s tax lawyers minimize liability while helping to maximize returns. We analyze and resolve corporate, tax, environmental, ERISA, intellectual property and commercial law issues that can arise in mezzanine financing transactions. Competition is fierce in capital markets, and we stay ahead of the curve to provide practical and prompt advice.

We counsel private equity investors through fund formation, primary investments and leveraged acquisitions; implementing value-added techniques at the initial funding stage; servicing ongoing portfolio company investments; and structuring innovative exit strategies. Our experience includes advising clients in the most dynamic industries – life sciences and energy and clean technology, among others. Working closely with the Intellectual Property group, we know the particular risks and rewards associated with investing in these industries. The team also has distinctive experience in a variety of other industries, including consumer products and retail, e-commerce, media and entertainment, financial services, industrial manufacturing and distribution, biotechnology, consumer products, software, telecommunications and networking, and health care.

We specialize in representing funds that engage in middle market transactions and counsel leading private equity firms and investors in transactions such as:

  • Fund formation
  • Leveraged acquisitions and restructurings
  • Buyouts
  • Recapitalizations
  • Senior and mezzanine financings
  • Secondary transactions
  • Portfolio company transactions
  • Public offerings and private placements

Our investor clients include:

  • Private equity funds
  • Mezzanine funds
  • Small business investment companies (SBICs)
  • Business development companies
  • Insurance companies
  • Clubs (two or more private equity funds acquiring a company)
  • High-net-worth family partnerships
  • Other strategic and institutional investors

The group features attorneys experienced in securities, corporate finance, tax, technology and intellectual property, real estate, environmental, labor and employment, ERISA, and litigation, assuring clients that every aspect of a private equity transaction is covered.

Securities Litigation
We defend businesses, financial institutions and accounting firms in federal and state courts nationwide, as well as in arbitration and regulatory proceedings before the SEC, FINRA, the CFTC, the NYSE and the American Arbitration Association.

  • Broker-Customer Dispute Resolution and Arbitration
    Our experience defending broker-dealers and their registered representatives covers all aspects of retail disputes, including claims of churning, unsuitability, misrepresentations and omissions, unauthorized trading, sales practice violations, failure to supervise, and other state and federal securities law claims. We arbitrate cases involving corporate stocks and bonds, limited partnerships, mutual funds, futures, and other financial products, and have appeared in virtually every forum. 
  • Regulatory and Disciplinary Proceedings
    We handle inquiries, investigations, and disciplinary and regulatory proceedings on behalf of major investment banks, wire houses, investment companies and investment advisers, including their senior officers. The group defends civil, criminal and administrative enforcement actions involving alleged violations of federal securities laws and state blue-sky laws, and advises on equity and fixed income trading, net capital, margin, insider trading, and registration issues.
  • Employment Disputes
    We defend claims brought by our clients’ former employees before state and federal courts and various arbitration tribunals, including wrongful termination, retaliation, defamation, sexual harassment and discrimination.

Compliance and Ethics Programs
We counsel businesses in implementing effective corporate compliance and ethics programs, including training, policies and procedures reviews, and development of practical compliance infrastructures for regulated and non-regulated industries.

Representative Matters

We achieved a de minimis settlement in this class action brought by individuals claiming deception related to their investment in a biotechnology startup.
After our motions to dismiss, the plaintiffs withdrew their class action alleging false proxy disclosures related to a merger.
Our lawyers achieved a favorable settlement prior to trial in a securities class action alleging false financial disclosures.
These putative class actions styled as “shelf space” securities fraud cases were dismissed with prejudice on our motions to dismiss.