Mutual Funds & Investment Advisers

JORDEN BURT's Mutual Funds and Investment Advisers Industry Group provides a full range of corporate, regulatory, and litigation services to mutual funds and investment advisers. Our lawyers offer practical advice and insights based on decades of experience providing sophisticated counseling and litigation services to mutual funds and investment advisers throughout the nation. Many of our lawyers have worked and held senior positions at the SEC.

Our interdisciplinary approach includes legal fields of particular importance to mutual funds and investment advisers. In addition to securities law and litigation, these fields include anti-money laundering compliance, distribution, electronic commerce, intellectual property, privacy, tax, and ERISA. We are preeminent in matters relating to mutual funds that fund variable insurance products, such as variable annuities and variable life insurance.

OUR STORY

Since the early years of the Firm's development in the 1980s, our lawyers have been involved at all levels in addressing issues affecting mutual funds and investment advisers. In the 1990s, our practice group was guided by the experience of the then former Director of the SEC's Division of Investment Management, Sydney Mendelsohn. As a result of this original focus, during the past 20 years, the Firm has continued to build upon its reputation in the mutual fund and investment adviser practice area, providing our lawyers with significant training and experience.

Today, our lawyers continue our tradition of excellence not only through their outstanding representation of clients, but also by their regular contributions to industry conferences and publications.

OUR STYLE

Our lawyers emphasize clear communication, time-saving processes, and responsiveness. To this end, we deliver our advice using oral and electronic communication, instead of memos and letters, as feasible. We write our memos in plain English using captions, short paragraphs, bullets, and white space and confining technical legal discussion to footnotes where appropriate.

We meet weekly to discuss important issues and trends, so our clients can have the benefit of our collective insights when they call. Our weekly meetings also enable our clients to get an informal "industry pulse" on current issues. In addition, we maintain extensive historical research files that allow us not only to craft advice based on hard to find precedent, but allow us to expeditiously address issues previously considered.

We staff assignments efficiently and appropriately. We send one partner to committee and board meetings unless otherwise requested or agreed. We apply a team approach so our clients can have the benefit of the lawyers with the most relevant experience on a particular issue.

OUR SERVICES

We represent mutual funds and investment advisers throughout the nation on a full range of matters. Set out below is a representative list of the types of matters on which we advise our fund and adviser clients:

Corporate Organization

• Entity formation, e.g., Delaware corporations and business trusts, Maryland corporation, Massachusetts business trusts, and sponsor-selected jurisdictions
• Redomestication, with a focus on:
  • Maryland corporations to Delaware business trusts
  • Massachusetts business trusts to Delaware business trusts

Corporate Governance

• Pre- and ongoing qualification of directors and officers
• Committee structure and operation
  
  • Audit
  • Governance
  • Nomination
  • Valuation
• Board and Committee meetings
• Board and Committee self-assessments
• Director education

Corporate Transactions

• Fund mergers
• Fund "adoptions" (so-called "Turnerization" transactions)
• Adviser acquisitions
  
  • Stock purchases
  • Asset purchases
• Fund liquidations and adviser dissolutions

Capital Structure

• Open-end companies
• Closed-end companies
• Face-amount certificate companies
• Multiple classes
• Funds of funds
• Master-feeder funds
• Exchange-traded funds

Compliance

• 206(4)-7 compliance program
• 38a-1 compliance program
• Legal compliance reviews
• Operational risk assessments
• Regulatory inspection counseling
• Mock regulatory inspections
• Specific policies and procedures, such as:
  
  • Rule 2a-7 policies and procedures
  • Rule 12d3-1 policies
  • Anti-money laundering policies and procedures
  • Brokerage practices, such as
    
    • Rule 10f-3 procedures
    • Rule 17a-7 procedures
    • Brokerage allocation and bunching
    • Brokerage recapture arrangements
    • Soft dollars
    • Use of affiliated brokers (Rule 17e-1)
  • Business continuity and disaster recovery plans
  • Complaint handling policies
  • Codes of ethics
  • Custody and securities depository policies
  • Disclosure policies
  • Insider trading policy
  • Portfolio holdings policy
  • Privacy policy
  • Prospectus update policy
  • Dividend declaration policy
  • Fidelity bond and joint E&O/D&O policies
  • Financial reporting and controls:
    
    • Disclosure controls and procedures (N-CSR, N-Q)
    • SOX Section 404 compliance
  • Illiquid securities procedures
  • Investment objectives, policies and restrictions compliance
  • Market timing policies and procedures
  • Pricing procedures including:
    
    • Pricing error correction policies
    • Fair valuation policies
  • Proxy voting policy
  • Recordkeeping policies and procedures
  • Repurchase agreement policies
  • Securities lending policies

Independent director representation and counseling

• Committee and board representations
• Self-evaluations
• Executive sessions

Investment Advisory Relationships

• Advisory agreements
• Subadvisory agreements
• Manager of managers arrangements
• Multi-manager sleeves
• Section 15(c) review
• Assignment of contracts

Distribution Relationships

• 12b-1 plans and agreements
• Finders and solicitors
• Principal underwriting agreements
• "Revenue-sharing" arrangements
• Selling group agreements
• IRA related agency agreements

Strategic Relationships

• Affinity groups
• Life insurance companies, including variable insurance products

Ancillary Relationships

• Administrator
  
  • Review and negotiation of administrative services agreements
• Auditors
  
  • Review of engagement letters, reports, and non-audit services
• Counsel
  
  • Review of independence
• Custodian
  
  • Review and negotiation of custody agreements
• Other service providers
  • Best execution analysts
  • Proxy solicitation firms
  • Transfer agents

Advertising and Marketing

• Advertising and sales material review
• Advertising and sales material compliance manual
• FINRA filing requirements and responses to FINRA staff comments
• Performance computations

Taxation

• Subchapter M compliance
• Subchapter L compliance (underlying funds)
• Private letter rulings
• Treasury and Internal Revenue Service dispute resolutions

ERISA

• Compliance counseling
• DOL letter rulings

SEC Registration

• Preparation and filing services for Forms N-1A, N-2, N-3, N-4, N-6 and ADV, as well as the "S" forms
• Develop disclosure and templates, including Form ADV Part II brochures
• Respond to any SEC staff comments

Exemptive and No-Action Relief

• Pre-filing conferences
• Preparation and submission
• Representative 1940 Act relief:
  
  • Affiliated transactions - §17(d)
  • Director disqualification - § 9(a)
  • Exchange offers - § 11(a)
  • Fee rebates - Rule 12b-1
  • Fund of Funds - § 12(d)
  • Manager of managers - §§ 15, 18
  • Redeemability- § 2(a)(32)
  • Substitutions - § 26(c)

Litigation and Counseling

• Market timing and revenue sharing
• Class actions
• SEC enforcement
• FINRA arbitrations
• Expert witness testimony
• Independent compliance consultant

CFTC Counseling

• Analysis of exemptions

Product Design and Structuring

In-house Training

• Legal, compliance, and operations staffs and executives
• SEC filings
• Operational compliance
• Advertising and marketing

OUR THOUGHT LEADERSHIP

The Mutual Funds & Investment Advisers Industry Group advises its clients on industry-leading trends and issues, such as those described below.

Retirement Income. Baby boomer demographic trends have shifted the focus from asset accumulation to "decumulation," which involves converting assets into an income stream that will last through retirement. Responding to this need for retirement income has become one of the most significant issues today for mutual funds and investment advisers. This shift in focus involves a broad range of issues relating to:

• product design and pricing;
• senior suitability;
• marketing and distribution; and
• clear and appropriate disclosures.

This shift in focus also involves strategic relationships between advisers, mutual funds, and life insurance companies and the development of national platforms, as well as careful consideration of tax implications for both the customer and for the financial institutions involved in creating retirement income solutions.

Product Due Diligence. Financial products are becoming increasingly complex and numerous. An important part of the due diligence process for any financial product involves understanding the features, costs, and risks of the product, as well as assessing the adequacy of related disclosures. An independent third party legal analysis of financial products can help in:

• assessing a manufacturer's product design,
• validating a distributor's strategic planning,
• informing an adviser's product allocation decisions, and
• assessing potential litigation risks.

An independent third party legal analysis of financial products also can be useful in pointing out the need for:

• additional or clearer disclosures,
• enhanced compliance and suitability processes, and
• more rational or robust allocations of responsibilities, liabilities, and indemnities agreements between manufacturer's and financial intermediaries.