Thu, Nov 23, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Fund Alignment Rights levels playing field between investors and hedge fund managers

Tuesday, June 17, 2014

Komfie Manalo, Opalesque Asia:

The Fund Alignment Rights issued by the U.S. Internal Revenue Service (IRS) has leveled the playing field between investors and hedge fund managers, particularly in terms of incentive compensation, said business solutions provider OptCapital.

Last week, the IRS issued revenue ruling 2014-18 that allows hedge funds the ability to provide incentive compensation in the form of fair market value (FMV) options or stock appreciation rights (SARs). This new ruling clarifies that stock options and stock-settled SARs, properly designed, can be used as a form of compensation to managers of offshore hedge funds and other "nonqualified entities" under Internal Revenue Code Section 457A.

Rick Ehrhart, president and CEO of Optcapital, commented, "We at Optcapital are excited about the revenue ruling that has finally made this alignment of interests a viable and mutually beneficial arrangement for hedge fund managers and investors alike. With the clarification of this ruling, investors can now ask for, and managers can now offer, Fund Alignment Rights with the use of FMV options/SARs to their investors that serve a long-term advantage to all.

According to Ehrhart, a solution to the traditional compensation alignment problem is to deliver the manager’s incentive fee in the form of a stock option or stock-settled SAR, with a grant price equal to the fair market value of the fund shares on the ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Outlook - Gundlach's stock market warning comes true[more]

    From Bloomberg.com: Jeffrey Gundlach has been warning something's got to give. Based on the past two days, looks like we have our answer. Stocks fell around the world a second day and high-yield bonds headed for a fourth straight loss, resuming a historic correlation that the hedge fund manager on W

  2. Middle East - Saudi-Iran war would create this domino effect of global disaster, Saudi billionaires said to move funds from region to escape asset freeze[more]

    Saudi-Iran war would create this domino effect of global disaster From CNBC.com: Events appear to be spinning out of control in the Middle East, and the threat a Saudi-Iranian war is looking increasingly credible. Make no mistake, an out and out conflict between the two nations would be

  3. Investing - Six more Warren Buffett buys, including Southwest Airlines, Seth Klarman's Baupost Group bets on beaten-up health care, Roark Capital offers to buy Buffalo Wild Wings: Wall Street Journal[more]

    Six more Warren Buffett buys, including Southwest Airlines From Forbes.com: Our latest recommendation for aggressive investors is Restaurant Brands International . Hedge fund manager Bill Ackman has an incredible 40.1% of his fund at Pershing Square Capital Management invested in Restaur

  4. Investing - Tages Capital steps in to rescue Italy's Banca Carige, Hedge funds place $5.4bn bet on Toshiba's resurrection, Why outside investors are fleeing: John Paulson's 6 worst investments[more]

    Tages Capital steps in to rescue Italy's Banca Carige From TheTimes.co.uk: A little known London hedge fund has played a pivotal role in the first rescue of an Italian bank without state intervention since the country's bad debt crisis started three years ago. Banca Carige, a Genovese le

  5. Tourbillon Capital, a $3.4bn hedge fund that's been sounding the alarm about 'frothy speculation,' is suffering big losses[more]

    From Businessinsider.com: Tourbillon Capital, a $3.4 billion hedge fund firm led by Jason Karp, is suffering. The firm's flagship Global Master fund is down 3.5% for the first 17 days of November, bringing performance for the year to November 17 to a loss of 10.6%, according to a note to investors s