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From Kirsten Bischoff, Opalesque New York: With the possibility of additional hedge fund redemption requests looming in the near future, there is also the likelihood that more managers will need to utilize gate provisions to stem the tide of outgoing assets. Opalesque recently had the chance to ask Michael Tannenbaum about some of the legalities of these provisions. Tannenbaum, founding partner at law firm Tannenbaum Helpern Syracuse & Hirschtritt LLP, leads the firm’s Financial Services, Hedge Funds and Capital Markets Group.

Gates seem to inspire great surprise and anger in investors - even though they are explicitly discussed in a fund's legal documents. Is there any positive aspect at all to a fund manager enacting a gate on redeeming investors? The notion of a gate is entwined with the investor’s mindset as to the expected term of the investment – i.e. whether the investment horizon is long term or short term.

When the investment horizon is a long term one, a gate can be exceedingly useful device, one that is protective of the investor with such view because it affords the investment manager the opportunity to develop the investment strategy, unfettered by the need to otherwise maintain larger that useful cash reserves to meet redemption demands. Well informed investors will likely understand not only the need for a gate but also the protection that the same affords and should welcome the same i......................

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