Overview

Schiff Hardin has a dedicated investment management practice that focuses squarely on representing the independent directors and trustees of mutual funds and exchange traded funds. We also represent registered funds and registered investment advisers, helping them to manage all aspects of their business. The strength of the practice lies in the fact that all of our senior attorneys have decades of real life experience garnered from different segments of the financial services industry. We provide insights on industry best practices while staying in front of regulatory developments. Our clients include funds and independent directors of funds of all sizes, from small start-up funds to some of the largest, most well-known, nationally distributed fund complexes.

Key Focus Areas of Our Investment Management Practice

  • Open-End Funds
  • Fund Governance
  • Registration Statements
  • Closed-End Funds
  • Compliance Policies
  • No-Action Letters
  • Exchange-Traded Funds
  • 15(c) Advisory Contract Renewal
  • Exemptive Applications

In addition, at Schiff Hardin we have experience across the firm to assist in related practice areas, including broker-dealer regulation, tax, insurance, private funds, SEC examinations and enforcement, ERISA, commodities, and derivatives.

We Understand Our Clients

Our senior attorneys have worked inside the industry, have represented the industry within large national trade associations, and have been in private practice representing investment management clients for many years. We are not new to this business and the breadth of our experience working within, and representing the interests of, investment management firms gives us a unique ability to understand how investment management firms operate and the challenges they face.

This experience tells us that no two fund boards or complexes are alike. We develop a thorough understanding of the nuances of each of our fund complex clients so that we can help them stay abreast of regulatory issues that may impact their business operations.

We represent funds and independent directors that serve on fund boards of different sizes, compositions and structures, from stand-alone proprietary funds, to multi-manager and manager-of-manager structures as well as fund-of-funds.

We Help Our Clients in Challenging Times

We use our deep knowledge of the industry, and our industry experience, to help our clients achieve their business goals while satisfying their duties and responsibilities to fund shareholders and to their clients. Over the past decade, there have been ongoing regulatory changes impacting both registered funds and the oversight responsibilities of their independent directors. Registered funds continue to digest and comply with more regulatory requirements, while their independent directors are under more scrutiny than ever. The SEC continues to propose regulations that impose further responsibilities on independent directors that impact fund governance.

We closely monitor regulatory developments impacting registered funds and their independent directors, guiding them through regulatory compliance issues and emerging best practices. Our experience in how investment management firms operate help us to help our clients achieve workable solutions.

We Work Well with Our Clients and Their Service Providers

Funds require services from a host of different parties, some of which are affiliated with the sponsor of the funds. We assist our independent director clients in overseeing the relationships with these parties. We understand that not all parties will see eye-to-eye on every issue, so we seek to promote a constructive dialogue among fund sponsors, boards, and service providers. We work collaboratively with these parties to facilitate candid and productive conversations about issues that impact funds and their independent directors.

We know that fund sponsors and independent directors share an interest in the success of the funds they manage and oversee, and believe that independent directors benefit from the perspectives each party brings to the boardroom. We seek to promote an environment in the boardroom that is cooperative, while advising our clients on issues that may require heightened scrutiny. 

  • Experience

    We represent fund independent directors and registered funds, guiding them through fund formations, mergers, and liquidations; the advisory contract renewal process; service provider oversight; regulatory and compliance issues; board meeting preparation; fund distribution issues; and securities enforcement and litigation. We stand ready and have engaged on the challenging issues presented by SEC examinations; adviser changes of control; shareholder litigation; fee negotiations; and succession planning, to name a few. We have gained a reputation as industry leaders and are often sought out to participate in working groups, serve on advisory panels, speak at conferences, and serve as a media source.

    Fund Governance and Representing Independent Directors
    The SEC’s view of the role of independent directors of registered funds as “watchdogs” for the funds’ shareholders has never been more pronounced. More and more, independent directors are expected to oversee sophisticated areas of investment management businesses, including distribution, derivatives, liquidity, and cybersecurity. We help independent directors to navigate these areas.

    Our broad and prestigious client base provides us with a breadth and depth of experience in the independent director representation arena that has little parallel in the industry. We leverage this experience to provide our clients with insights into true industry best practices and to participate actively in the dialogue on regulatory developments affecting independent directors.

    We view our role as independent director counsel as a multi-faceted one. First and foremost, we ensure that independent directors meet their statutory and regulatory obligations while representing the best interests of fund shareholders. We also help independent directors develop policies and procedures for the increasingly complex areas where board oversight is appropriate. We bring our experience to recommend state of the art processes for board meeting material preparation, the advisory contract renewal process, oversight of service providers, and interaction with regulators.

    Our representation of directors includes guidance in the following areas:

    • 15(c) contract renewal process - We assist our Board clients in their review of the voluminous materials required in connection with the annual 15(c) process by developing tools, summaries, and other appropriate means and methods by which they can digest and consider the relevant information necessary to come to an informed business judgment on renewing advisory and other important service agreements. We tailor this 15(c) review process to the needs of the particular client.
    • Compliance Policies and Procedures and Proper Board Oversight - We help our Board clients ensure that fund practices, policies, and procedures include appropriate methods and practices to enable the Board to perform its oversight role. We ensure that Boards receive sufficient information and reporting to perform this oversight while at the same time protecting against the tendency to involve the trustees in day-to-day management functions or in receiving too much information not properly summarized for Board consumption.
    • D&O Insurance Matters - We regularly advise our fund board clients on directors and officers (D&O) insurance matters, including consulting with insurance brokers, reviewing insurance coverage terms, and advising on D&O policies and their interaction with corporate indemnification provisions.
    • SEC Examinations - We guide independent directors in the assessment of issues raised during examinations and either prepare or coordinate with other counsel on a response that reflects full board engagement.

    Representing Registered Funds
    We represent funds of all sizes, from small start-up funds to some of the largest, most well-known, nationally distributed fund complexes.

    Fund Formation and Operation

    Our fund clients employ a broad range of investment strategies, from traditional equity and fixed income strategies to more sophisticated strategies, such as managed futures strategies, alternative strategies, and managed volatility strategies. We have assisted our fund clients in the development of funds with various structures, including master-feeder funds, exchange-traded funds, manager of managers funds, funds underlying insurance company separate accounts, and funds with multiple class structures. If needed we prepare exemptive applications and requests for no-action relief.

    We advise asset managers and funds throughout the lifecycle of the fund, from providing advice regarding fund creation, providing advice regarding potential investments by funds, or providing advice during transactions such as mergers and acquisitions, or liquidations. We also assist with ongoing fund filings and investment operations issues.

    Exchange-Traded Funds (“ETFs”)

    We have significant experience advising ETFs, which includes serving as counsel to the independent trustees of a preeminent ETF sponsor. We advise both index-based and actively managed ETFs, which includes advising them on the formation of their structures in reliance on generic no-action relief issued by the SEC, and obtaining approval to list and trade them if they do not qualify for such relief.

    Several of Schiff Hardin’s attorneys are former SEC staff members, so we know how to work with SEC divisions and we understand their approach to ETF regulation. We also work regularly with the staffs of the national securities exchanges that list and trade ETF shares.


    Representative Matters

    “Manager of Managers” Complex
    We advise the independent trustees of fund complexes structured as “manager-of-managers” complexes. These complexes engage dozens of asset management firms as sub-advisers, including many of the largest, most well-known, international asset management firms. The complexes are each comprised of over 30 separate funds and contain all manner of investment strategies, including asset allocation, alternative funds, domestic and international equity, and fixed income funds (including emerging market debt and high yield bonds).

    Domestic Multiple Series Trust Complexes
    We represent both the funds and the independent trustees of a number of clients. Some of these asset managers are smaller and have less experience in the mutual fund area, we advise independent trustees on going concern issues, distribution-related issues, and dedication of necessary resources by the manager to compliance. We have used our innovative 15(c) review process to assist the board in performing this critical task. We have also assisted the trustees with frequent fund launches (with new or existing managers) fund mergers, fund adoptions, and fund liquidations.

    Cluster Board Structure
    We represent the independent trustees of three boards within a large fund family. The boards collectively have responsibility for over 200 funds. We actively coordinate common board presentations, the development of consistent policies and procedures, and presentations by portfolio managers. While many of the issues are similar, each cluster oversees funds with a unique strategy so we must be attentive to those distinctions that are relevant to each board’s oversight. We have developed a process to manage the contract renewal process to help the trustees identify and focus on individual funds that require more attention. We also take the lead on drafting the required disclosure of board considerations in their approval of the contracts for the funds.

    Independent Trustees of Start-Up ETF
    We helped guide the board of a new ETF complex through the approval and oversight of a new group of funds. The funds have a unique strategy so we worked with the management company to identify reports that would provide relevant and clear explanations of the implementation of that strategy.

    Investment Adviser Compliance
    Our team advises a number of SEC-registered investment advisers on their obligations under the federal securities laws. In addition to addressing issues that arise in their day-to-day responsibilities, we help our clients with registration issues, the development of policies and procedures, negotiations with service providers, and reactions to regulatory proposals. We have helped a number of clients develop comprehensive compliance programs. As part of this process, we ensure that the programs cover regulatory requirements, conditions of exemptive relief, and current examination priorities. We work closely with the chief compliance officers to establish effective monitoring programs and board reporting. We also communicate frequently with the investment adviser regarding issues that may impact the funds’ compliance with regulatory requirements. We have conducted mock exams and annual compliance reviews for investment adviser clients.