[message_box title="" color="blue"] 2017 PRIVATE FUND CONFERENCE: DOES 'TWO AND TWENTY' HAVE A FUTURE? [/message_box]
Private Fund Conference Overview
The Lowell Milken Institute for Business Law and Policy at UCLA School of Law presented its fourth annual Private Fund Conference and accompanying Private Fund Report.
Incentives play a crucial role in Private Equity and Hedge Funds. Investors are looking for high returns at a time when many private funds are struggling to beat conventional indices. Regardless, the traditional "Two and Twenty" compensation structure allows many fund managers to still earn substantial revenues even when performance is inconsistent or lags lower-cost public market options. Many frustrated investors are re-examining the assumptions that underpin compensations structures that include both an annual management fee (regardless of results) and an explicit performance fee (which can produce eye-watering sums when investors make substantial allocations).
Institutional investors need access to proven managers who have demonstrated the skills and judgment necessary to earn high returns. Conversely, generous fee structures can degrade otherwise high returns earned by managers.
What should be done to ensure that interests are sufficiently aligned between fund limited partners and fund general partners to ensure that each side gets the full benefits of the bargain they wish to make? Is there room for an increased role by the Securities and Exchange Commission to police fee structures in private funds?
Presentation Slides
Private Investment Fund Fee Structure and Blockchain Applications - Wulf Kaal
2-and-20 vs 1-or-30 - Jonathan Koerner
Financial Regulations, Enforcement & Cybersecurity - Elizabeth Gray
Investing for the Long Term - Jagdeep Bachher
Pictures of the 2017 Private Fund Conference:
[column col="1/3"]
[/column]
[column col="1/3"]
[/column]
[column col="1/3"]
[/column]
Conference Agenda: May 18, 2017
8:00 a.m. - Registration
8:15-8:25 a.m. - Welcome from Timothy Spangler, Director of Research, Lowell Milken Institute for Business Law and Policy
8:30-9:30 a.m. - Panel One: Management Fees and Expenses – Keeping the Lights On
9:45-10:45 a.m. - Panel Two: Carried Interest, Performance Fees and Alignment of Interest
11:00 a.m.-12:00 p.m. - Panel Three: Trends in Enforcement and Compliance for the Private Fund Industry
12:15 -1:30 p.m. - Lunch and Keynote Address by Jagdeep Bachher
Keynote Speaker
Jagdeep Bachher, Chief Investment Officer of the UC Regents
Jagdeep Singh Bachher is responsible for managing the UC pension, endowment, short-term, and total-return investment pools which total almost $100 billion. He reports directly to the Board of Regents on investment matters and the chief financial officer on administrative issues related to managing a group of more than 60 investment professionals and staff.
The Panels and The Panelists
Panel One: Management Fees and Expenses - Keeping the Lights On - a discussion of how the "fixed costs" of establishing and running a private fund impact the fund investors, and what steps can be taken in the fund's documentation to better communicate these factors to fund investors and alleviate concerns that they dampen return.
Panelists:
[column col="1/4"]
[/column]
[column col="3/4"]
Shifat Hasan, Associate Portfolio Manager, CalSTRS
Ms. Hasan has been in financial services for more than a decade and has been with CalSTRS since 2012. CalSTRS provides retirement and related benefits to nearly 1 million teachers in California and is one of the largest public pension funds in the world. Prior to joining CalSTRS, Ms. Hasan worked for Crestone Capital Advisors. Ms. Hasan has an MBA from Texas A&M University.
Wulf Kaal, Director, Private Investment Fund Institute, University of St. Thomas School of Law
Mr. Kaal is a technologist and studies the intersection of law, business, and technology. His research focuses on innovation, technology, smart contracts, hedge funds, dynamic regulatory methods, and blockchains. Mr. Kaal is a leading expert on private investment fund regulation and compliance and private investment fund innovation in finance. His scholarship constitutes over 85% of the empirical and theoretical scholarship on private fund regulation in the United States. Before entering the academy, he was associated with Cravath, Swaine & Moore LLP, in New York, and Goldman Sachs in London, UK. Mr. Kaal has a Ph.D. from Humboldt-Universitaet zu Berlin; a J.D. and LLM from the University of Illinois College of Law and an MBA from Durham University, U.K.
Robert S. De Leon, General Counsel and CCO, Rimrock Capital Management, LLC
Rimrock is a California-based hedge fund manager with over $8 billion in assets under management. Mr. De Leon’s career has been in financial services, serving as general counsel of Tradewinds Global Investors, LLC and Covariance Capital Management, a unit of TIAA-CREF. He also served as associate general counsel of TIAA-CREF and as counsel of AllianceBernstein. Mr. De Leon served three years as Senior Counsel for the U.S. Securities & Exchange Commission. He also practiced law at several BigLaw firms and is a 1990 graduate of Harvard Law School.
Sanije Perrett, Founding Partner and President, Arena Capital Advisors
Arena Capital is an independent investment management firm specializing in fixed income, focusing primarily on the corporate bond and leveraged loan markets. Prior to founding Arena, Ms. Perrett was with Post Advisory Group as the Chief Operating Officer and member of the Board of Directors. She also served as the Chief Legal and Compliance Officer at Relational Investors. Ms. Perrett has also worked in London as Senior Counsel for Nomura International where she was responsible for corporate, regulatory and litigation matters. She was a regulator for the State of Arizona, Securities Division where she was part of the Enforcement, Trading & Markets and Investment Management Divisions. Ms. Perrett earned her law degree from the University of Wales, UK.
[/column]
Panel Two: Carried Interest, Performance Fees and Alignment of Interest - a discussion of new developments in the alignment of interests between fund managers and fund investors when it comes to the allocation of incentive remuneration, particularly after a period where private funds appeared to lose their competitive edge over traditional investment strategies.
Panelists:
[column col="1/4"]
[/column]
[column col="3/4"]
Edmond Fong, Managing Director, Hedge Funds & Strategic Opportunities, University of California, Office of the CIO
Mr. Fong joined the University of California’s Office of the CIO in 2010 as Director of Absolute Return. He became Director of Hedge Funds & Strategic Opportunities in 2014. Prior to joining UC, he worked in several funds. He has an MBA from University of Chicago Booth School of Business. He was named a Hedge Fund Rising Star by Institutional Investor.
Jonathan P. Koerner, Partner, Albourne Partners
Mr. Koerner is Head of Implementation of Albourne Partners, an international provider of independent research and advice on complicated assets. He has a J.D. and MBA from the University of Utah. Prior to joining Albourne in 2015, he served as investment analyst and investment counsel for Utah Retirement Systems. Mr. Koerner has also been an adjunct professor in venture capital finance at the University of Utah David Eccles School of Business.
Judith Posnikoff, Managing Director, Co-Founder, PAAMCO
PAAMCO is a leading institutional investment firm dedicated to offering alternative investment solutions to the world's preeminent investors. Ms. Posnikoff has served as Chair of the Investment Oversight Committee and is currently focused on portfolio construction as a member of the firm’s Portfolio Construction Group. Ms. Posnikoff has authored numerous publications in the area of alternative investments and has taught at the University of California, Riverside and Irvine and at California State University, Fullerton. She is a member of the founding board of directors of the Association of Women in Alternative Investing (AWAI) and is on the board of 100 Women in Hedge Funds and the CAIA Foundation. Ms. Posnikoff earned a PhD, MBA and MA from UC Riverside.
Reena Lalji, General Counsel, Wilshire Associates Inc.
Having built her career in financial services, Ms. Lalji serves as head of legal and compliance and provides support on a broad range of issues to all operating divisions of Wilshire Associates, a global advisory company specializing in investment products, consulting services, and technology solutions. Prior to joining Wilshire Associates in 2009, she served as Senior Counsel for RBC Financial Group. In addition to working for other financial services companies in Canada, she was also an associate at a prominent Canadian law firm. She received her law degree from the University of Victoria and a Master of Laws from York University, Osgoode Hall Law School.
[/column]
Panel Three: Trends in Enforcement and Compliance for the Private Fund Industry – a discussion of recent trends and issues confronting the private fund industry – and why both fund managers and investors should keep their eyes on compliance issues.
Panelists:
[column col="1/4"]
[/column]
[column col="3/4"]
Elizabeth P. Gray, Partner, Willkie Farr & Gallagher LLP
Ms. Gray is Co-Chair of the Willkie Farr Securities Enforcement Practice Group and is Chambers ranked. She is nationally recognized in the area of securities regulation and enforcement, with significant experience in asset management, broker-dealer, cybersecurity, FCPA and accounting matters. She represents investment advisers, investment companies and their boards, broker-dealers, and other institutions and senior executives. Prior to private practice, Ms. Gray served for 12 years at the U.S. Securities and Exchange Commission, including as Assistant Director in the SEC’s Division of Enforcement. She received her J.D. from the University of Virginia School of Law.
Sara Kalin, Asst. Regional Director, Asset Management Unit, SEC
Ms. Kalin is an Assistant Regional Director in the Asset Management Unit of the SEC’s Enforcement Division, and has worked in the Los Angeles Regional Office for 10 years. She was formerly a Legal Branch Chief in the SEC’s Division of Corporation Finance in Washington, DC, overseeing the review of filings by public companies and issuers of asset-backed securities. Prior to joining the Commission in 2003, she worked as a corporate associate at Kirkland & Ellis LLP. She received her J.D. from the UCLA School of Law.
Joel Wattenbarger, Partner, Ropes & Gray LLP
Mr. Wattenbarger represents investment management clients, focusing primarily on hedge funds, funds of funds (FOF), private equity funds and fund managers. He advises clients on the establishment of funds and fund management companies, trading and other operational issues, and compliance issues faced by registered investment advisers. He also has considerable experience representing institutional investors in private investment funds and private funds, as well as fund managers in connection with the establishment of fund management companies and the organization of hedge funds, private equity funds and FOF. He received his J.D. from Harvard Law School.
[/column]
Directions and Parking
The 2017 Private Fund Conference was held at:
UCLA School of Law
385 Charles E. Young Drive East
Los Angeles, CA 90095-1476
Parking information can be found on our website.
Lodging Information:
[column col="1/3"]Hilgard House Hotel
927 Hilgard Avenue
Los Angeles, CA 90024
Reservations: 800-826-3934
(t) (310) 208-3945
(f) (310) 208-1972
www.hilgardhouse.com [/column]
[column col="1/3"]W Hotel
930 Hilgard Ave.
Los Angeles, CA 90024
(t) (310) 208-8765
(f) (310) 824-0355
www.wlosangeles.com [/column]
[column col="1/3"]Hotel Palomar
10740 Wilshire Blvd.
Los Angeles, CA 90024
Reservations: 800-472-8556
(t) (310) 475-8711
(f) (310) 475-5220
www.hotelpalomar-lawestwood.com [/column]
UCLA School of Law is a State Bar of California approved MCLE provider. This activity qualified for 3 hours of general MCLE credit.
This was a private event open to: Members of the California State Bar, UCLA Law Students, Faculty and Invited Guests.
This event was sponsored by Lowell Milken Institute for Business Law and Policy, UCLA School of Law, and Andrews Kurth Kenyon LLP. For more information, please contact lowellmilkeninstitute@law.ucla.edu.