Mutual Funds
Noted by Chambers USA as “the best ’40 Act firm in the USA” and by Legal 500 (US) as “a leading firm in the U.S. that is unsurpassed by any other firm,” our lawyers represent some of the largest mutual fund groups in the world. For many years, we have been ranked #1 for investment management by Chambers USA and Legal 500 (US). We counsel funds, their advisers, fund boards, independent directors, and audit committees. We currently represent approximately 50 mutual fund groups (which amounts to hundreds of separate mutual funds and dozens of boards of directors/trustees). For most of these mutual fund groups, we serve as counsel to the mutual funds and either the adviser (and its affiliates) or the independent directors/trustees. Our clients include some of the nation’s largest fund complexes, as well as small- and mid-size complexes. The assets under management for our top clients range from over $100 billion to $1.5 trillion.
We assist funds and their advisers in connection with fund organization and registration, and the development and implementation of compliance and supervisory oversight procedures. We provide advice regarding federal and state laws, rules and interpretative positions that may impact funds and their investment advisers, including with respect to financial and regulatory compliance and reporting, disclosure obligations, trading and brokerage practices, error correction, soft-dollar compliance, valuation matters, anti-money laundering, Regulation S-P (privacy policies), proxy voting, books and records requirements, distribution practices, solicitation and advertising limitations, web site compliance, and relevant tax and ERISA matters.
Dechert’s financial services group has a proven track record of innovative, sophisticated service to clients involved in “cutting edge” projects. For example, our lawyers obtained the first SEC exemption to permit a fund to charge a contingent deferred sales charge and Rule 12b-1 distribution fee in place of a front-end sales charge, the prototype for all “B” shares offered today by mutual funds. We also organized the first U.S.-registered closed-end investment company to invest in an “emerging market,” and the first U.S.-registered closed-end fund to invest exclusively in non-U.S. debt obligations. We obtained SEC exemptive relief to create the first operating “open-end interval fund,” a fund that issues redeemable securities that are redeemed less frequently than daily. Our lawyers have also obtained “no-action” or interpretive relief from the SEC addressing a number of novel issues, several of which represent the “state-of-the-law” in particular areas. For example, one such letter established the procedures utilized by all U.S.-registered funds investing in Russia to ensure the safekeeping of their Russian securities.
Other Dechert innovations include the following:
- We pioneered development of the registered “fund of hedge funds”
- We organized the first unit investment trusts to invest in equity securities
- We effected the first conversion of a unit investment trust to a management investment company form of operation
- We organized the first successful operational “fund of funds”
- We represented the independent trustees of the first U.S. “master/feeder” fund and later organized one of the first “master/feeder” funds
- We successfully submitted a rulemaking petition to the SEC to exempt from SEC registration certain Canadian mutual funds
- We served as the founding organizers of the first conference on the responsibilities of independent directors/trustees of mutual funds (for The American Law Institute/American Bar Association Committee on Professional Education)
Closed-end Funds
We have extensive experience advising clients on the establishment of closed-end funds as well as ongoing regulatory compliance. We have assisted clients in the development of innovative closed-end fund structures, including one of the first registered “funds of hedge funds” and the first closed-end fund “structured equity shelf” offering (which permit closed-end funds trading on a national securities exchange to offer shares continuously). Dechert lawyers assisted several clients in responding to concerns relating to the failure of the market for auction rate preferred stock in 2008. We also have experience in:
- Proxy battle defense
- Closed-end interval funds
- Discount management, including managed distribution plans, share buybacks and other strategies
- Rights offerings
- Tender offers
- Leverage, including lines of credit, derivatives, and tender option bond programs
- Closed-end fund de-leveraging
- General compliance issues
- One-of-a-kind and unusual deals, including secondary offerings and offerings by fund affiliates of fund shares requiring exemptive relief from the SEC
Since 1981, we have served as counsel for many U.S. closed-end funds organized to invest in Russia, China, Vietnam, Australia and New Zealand, France, Japan, Mexico, Spain and Portugal, Scandinavia, and other countries. We were also counsel for the underwriters of closed-end funds organized to invest in a variety of countries.
Bank-Sponsored Common and Collective Investment Funds
Dechert attorneys have considerable experience in advising clients in connection with all aspects of the establishment and operation of bank-sponsored common and collective investment funds. We routinely advise clients on the federal and state regulatory requirements applicable to bank-sponsored common and collective investment funds, including the tax, securities, ERISA, banking and fiduciary laws that govern the management and operation of these products. We are frequently called upon to advise clients on the applicable requirements for maintaining the exemption from SEC registration for collective investment funds that are sub-advised by non-affiliated entities. We have assisted financial institutions and investment advisory firms in connection with the offering of collective funds as investment options in 401(k) plans and other similar types of retirement products, and we have advised on the use of common trust funds as investment vehicles for tax-exempt and non-U.S. institutional investors. We have also advised on issues relating to the use of collective funds as vehicles for investing in alternative asset classes. In addition, we have also counseled financial institutions in connection with the conversion of their common and collective funds into proprietary mutual funds that are registered with the SEC.