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Liquid Alternatives

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Our Clients

Katten advises clients in all matters relating to liquid alternative investments and liquid alternative investment products, including the formation and operation of publicly offered and Investment Company Act of 1940-registered open-end mutual funds, exchange-traded funds and exchange-listed and over-the-counter closed-end funds pursuing alternative investment strategies.

We act as fund counsel and as counsel to independent directors, board committees, investment advisers and sub-advisers of registered funds and broker-dealers serving as fund distributors and underwriters. Our fund clients also include business development companies, variable life insurance and annuity products, and their providers.

Our Services

Our attorneys assisting clients with liquid alternative investments have extensive experience in the private fund and alternative space and the more heavily regulated operating environment of investment companies registered under the 1940 Act. By bridging both the private fund and registered fund worlds, Katten is uniquely positioned to assist alternative investment managers who are interested in implementing their liquid alternative strategies in a registered fund vehicle in order to gain access to the retail marketplace. Katten assists clients in determining if their liquid alternative investment strategies are appropriate for private fund vehicles, registered fund vehicles, or both. This determination involves:

  • assessing the feasibility of implementing liquid alternative investment strategies in a private fund and retail fund context;
  • determining if liquid alternative investment portfolios can be managed under applicable registered fund limits (e.g., the 1940 Act leverage restrictions);
  • determining the most appropriate structure for funds in the private (e.g., onshore or offshore; 3(c)(1) or 3(c)(7)) and registered (e.g., mutual fund, exchange-traded fund, closed-end fund or business development company) context; and
  • weighing whether to utilize existing umbrella fund platforms or create new fund entities.

Our approach emphasizes enhancing a registered fund's public reputation through the provision of timely and sophisticated legal advice without impeding the fund's ability to achieve its performance goals.

In relation to liquid alternative investments, our services include the areas below.

  • Designing fund products, including arranging and attending new retail product meetings with the Securities and Exchange Commission (SEC) in advance of registration
  • Forming fund entities and obtaining SEC and state registrations
  • Negotiating and drafting all required contracts, including adviser, distributor/underwriter and service provider agreements and other contracts, such as financial index licenses
  • Advising on fund tax compliance, including Subchapter M tax issues, state tax issues, tax-exempt bond fund considerations, hub-and-spoke and master-feeder structures and preferential dividend issues
  • Handling board, committee and shareholder meetings
  • Drafting codes of ethics and compliance policies and procedures
  • Making periodic reports to shareholders and SEC filings
  • Reviewing advertising and marketing materials for Financial Industry Regulatory Authority compliance
  • Advising on portfolio investment pricing/valuation, allocation and trading issues
  • Advising on conflict-of-interest transactions, including side-by-side management conflicts between liquid alternative and private funds as well as changes in adviser compensation, fund mergers and acquisitions, and conversion of closed-end funds to open-end funds
  • Preparing requests for SEC no-action, interpretive and exemptive relief
  • Participating in client meetings with the staff of the SEC
  • Advising about communications made before and during an offering
  • Facilitating introductions to exchanges, market makers and other market participants
  • Assisting in preparing for and responding to SEC examinations and inspections

We assist clients with their regulatory requirements pertaining to governance, liquidity and leverage, allocating investment opportunities, due diligence programs, and regulatory filings. We help create robust compliance programs with an emphasis on liquidity, valuation and leverage practices, board governance, and due diligence programs.

In addition, we have extensive experience in a full range of litigation matters that arise in connection with investment management and financial services, including civil actions in court and arbitration proceedings, SEC, Commodity Futures Trading Commission, Department of Labor and self-regulatory organization investigations, administrative and injunctive proceedings, and state and federal criminal proceedings.

Liquid alternative investment products are at the intersection of Katten's strengths in relation to our long history of providing counsel to registered public funds regulated by the 1940 Act and our sophisticated experience advising on the organization and management of private, alternative investment vehicles and their use of derivatives. With comprehensive financial services industry experience and in-depth product knowledge, Katten is able to provide counsel on the latest offerings, delivering pragmatic solutions that enable efficient operations and allow for future growth.

October 6, 2015
April 30, 2015
January 15–16, 2015
Blockchain Technical & Legal Workshop | Cambridge, Massachusetts
October 8, 2014
Liquid Alts for Fund Managers | New York, New York
October 1, 2014
Liquid Alts for Fund Managers | New York, New York
June 18–21, 2014
Risk Management & Trading Conference | Mexico City, DF, 01210 Mexico
Liquid Alternatives


Legal 500 UK - Corporate and Commercial – Investment Funds – Private Funds
Corporate and Commercial – Investment Funds – Private Funds, 2014
U.S. News Best Lawyers "Best Law Firms" – Private Funds/Hedge Funds Law (Chicago)
Private Funds/Hedge Funds Law (Chicago), 2013–2019
Legal 500 UK - Corporate and Commercial – Investment Funds – Hedge Funds
Corporate and Commercial – Investment Funds – Hedge Funds, 2014
Legal 500 US – Alternative/Hedge Funds
Alternative/Hedge Funds, 2013–2019
Chambers USA – Investment Funds: Hedge Funds (Nationwide)
Investment Funds: Hedge Funds (Nationwide), 2016–2019
U.S. News Best Lawyers "Best Law Firms" – Private Funds/Hedge Funds Law (National)
Private Funds/Hedge Funds Law (National), 2013–2019
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Corporate and Commercial – Investment Funds – Private Funds, 2014
Private Funds/Hedge Funds Law (Chicago), 2013–2019
Corporate and Commercial – Investment Funds – Hedge Funds, 2014
Alternative/Hedge Funds, 2013–2019
Investment Funds: Hedge Funds (Nationwide), 2016–2019
Private Funds/Hedge Funds Law (National), 2013–2019
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