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Trending Employment Law Issues for Fund Managers

Nov 7, 2016

The legal function is a necessary component within the lifecycle of a private fund. Typical matters include drafting of the offering documents, seeder and investors negotiations, compliance dealings and operational matters. Embedded within these matters are a full suite of employment law issues regarding, arguably, the most important asset of a fund: their employees.

Introduction to Restrictive Covenants

John Araneo, Partner at Cole-Frieman & Mallon LLP, discusses the use of restrictive covenants in the private fund industry, the policy against non-compete agreements and, in terms of drafting non-competes, what is considered a ‘legitimate protectable interest’ of an employer.  He also touches upon the recent initiative undertaken by the NY Attorney General with regard to such non-compete restrictions as well as how all of this applies to the alternative investment industry.  John punctuates this discussion by explaining how enforceable documents should be drafted and what should be considered during the drafting and negotiation processes.


John and Frank discuss cybersecurity and regulatory issues as they relate to employees, the SEC’s focus on these issues and the implications of a cyber-attack from both internal and external parties.

Track Record Portability

The panelists discuss track record portability and examine the legal and regulatory considerations, who ‘owns’ an investment track record and how it can be successfully ported by the employee and, conversely, how an employer can restrain such portability. John also addresses the various rules from the SEC and FINRA as they relate to portability and marketing.

Penalizing employee’s responsible for regulatory fines.  Whistleblower rights.

What is an appropriate penalty imposed on employees who receive regulatory fines – can these penalties include deductions from the employee’s wages? Additionally, panelists discuss whistleblower rights generally, what employers should be cognizant of and the legality of nondisclosure agreements as they relate to whistleblower claims.

Protection of Intellectual Property

Many times it is a private fund’s intellectual assets which differentiate them from their competitors. John and Frank discuss the protection of intellectual property – what is included under the intellectual property umbrella, and what can be protected including trade secrets, internal investment methodologies, research techniques, market signals and the like.

Classification & Separation Agreements

Lastly, panelists discuss classification issues regarding employee wages, exemptions from overtime pay and how independent contractors are defined. John and Frank wrap up the webinar discussing separation issues and drafting effective separation agreements.

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