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From the Investment Management Group at global law firm Seward & Kissel LLP.
In light of the significant recent volatility in the financial markets, set forth below are suggested steps that investment managers should consider taking:
• Trading Agreements: Take inventory of all trading agreements (ISDAs, repurchase agreements, securities lending agreements and prime brokerage agreements). Monitor NAV triggers closely. In the event that you expect to breach a trigger, we recommend contacting your counterparty and requesting a waiver and reset, rather than waiting for your counterparty to contact you. Being proactive in this regard will pay off in the long run. To the extent you have a term margin agreement, it is possible that a NAV trigger or current market conditions could trigger a termination clause. Accordingly, it is important to monitor these agreements. Financing and other charges that have not been fixed may also be adjusted by your counterparties on notice.
• Investor Communications & Treatment: Get organized and prepare for investor inquiries, particularly about liquidity. Mandate clear, consistent communication to all investors. For less liquid portfolios, be sensitive to the need for equal treatment of investors, should certain of them seek to exercise a special early liquidation option.
• Mandated Investor Notices: Various documents, including side letters and seed agreements, may require disclosure to inves...................... To view our full article Click here
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