DEVI’S CORNER: WHEN THE BANKS WON’T CALL YOU BACK – NAV TRIGGERS’ EFFECTS ON HEDGE FUNDS Between 2007 and 2009, many hedge funds declined in size due to investor redemptions and/or performance declines. These same hedge funds trade derivative agreements under an ISDA Master Agreement that typically contain provisions defined as Additional Terminations Events (”ATE”) which…

THE FUND ADVISOR – COLUMN 1: KNOW YOUR ISDA AGREEMENT The ISDA Master Agreement is not just a form. This is the first installment of the Fund Adviser, a column that will address legal issues commonly faced by hedge funds. Prominent among those issues are agreements with other parties. When effecting various trading strategies, a…

THE CREDIT AND LEGAL RISKS OF ENTERING INTO AN ISDA MASTER AGREEMENT When a hedge fund decides to enter into derivatives, the first hurdle is a large stack of documents that must be signed with each trading counterparty. This stack will usually include an ISDA Master Agreement published by the International Swaps and Derivatives Association. The…

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