Barbara Niederkofler and Christopher Poon Quoted in The Hedge Fund Law Report on U.S. Fund Managers’ Misconceptions About Marketing in Europe

Akin Gump investment management partner Barbara Niederkofler and counsel Christopher Poon have been quoted by The Hedge Fund Law Report in the article “Six Common Misconceptions U.S. Fund Managers Have About Marketing in Europe.” The article notes that many fund managers possess a limited understanding of what is necessary to market legally there, then outlines and offers ways to correct those misconceptions.

Niederkofler said one misconception held by U.S. fund managers is that they can avoid registration under the European Union’s Alternative Investment Fund Managers Directive (AIFMD) or each country’s national private placement regime (NPPR) if they market their non-European Economic Area funds using European placement agents. Poon added, “Managers are mistaken that think they can avoid making pre-sale disclosures, providing ongoing reporting to regulators or publishing an AIFMD-compliant annual report (including the remuneration disclosures) by simply appointing a placement agent or third-party distributor.”

The misconception likely originated, Niederkofler said, with confusion caused either by fund managers negotiating placement agent agreements without the use of outside counsel or by the placement agents themselves who were ignorant of the rules. Poon suggested that the misconception is often perpetuated by unscrupulous agents.

Poon also offered some advice for those relying on reverse solicitation, suggesting that managers make sure they comply with the appropriate requirements for the jurisdictions in which investors are located. He added that one should “maintain a very detailed record showing as many contact points as possible where the potential investor requested information, since that is the only time fund information can be provided.” Finally, Poon recommended that a manager “include clear representations in its subscription agreement pursuant to which the investor acknowledges that it solicited the investment in the fund and acknowledges the corresponding risks.”