Hedge Fund Hardball

October 10, 2008

Taylor H. Wilson, a partner in Dallas' Haynes and Boone who represents hedge fund managers, speaks of unprecedented events in that industry: Fund managers are beginning to dust off clauses in their contracts with investors that bar cash-outs in a liquidity crisis. At times such as these, some of those clauses call for paying investors seeking redemptions only in in-kind securities.

"It's bringing into play these clauses that have rarely, if ever, been used before," says Wilson.

Translation: Sophisticated, institutional investors who have stakes in hedge funds could cash out at such a fast clip that fund managers are willing to risk alienating them to staunch the outflow of money. I just might need to revise my I-just-won't-look-at-my-401(k)-statement approach to this financial crisis.

Excerpted from Tex Parte: The Texas Lawyer Blog. 

Related Practices

Email Disclaimer