Why Do Hedge Funds Need This Coverage?

Although the amount of litigation against hedge funds has remained relatively low, things have started to change. Historically, these funds were splashed over the news only when a massive fraud was committed against unsuspecting investors.

On February 1st 2006, the SEC required all hedge funds with assets greater than $30,000,000 to register. They now could be facing examinations, inspections, audits and possible investigations into their books and records. This is only the first step in regulation of a trillion dollar industry. Hedge funds are also subject to local, state and common laws, making management further targets of various lawsuits and legal action.

Below are some areas in which hedge funds are prone to claims:

AGAINST WHOM	SOURCE	TYPE OF CLAIM
Fund or General Partnership	Investors, Limited Partnerships, Regulatory Agencies	Breach of Fiduciary duty, allegations of fraud or dishonesty
Fund Manager or Directors & Officers	Competitors, Employees	Unfair competition, sexual harassment, wrongful termination, discrimination
Fiduciary of Employee benefit plans	Employees, DOL, PBGC	Breach of duty under ERISA
Fund or Fund Managers	3rd Party Clients	Failure to provide services or errors & omissions in professional services rendered
General Partners	Investors	Suitability, failure to disclose, transparency issues
Fund/Limited Partnership	Employee	Employee Dishonesty, fraud, computer or electronic theft of fund assets

Our coverages are specifically designed to cover claims made against Hedge funds and their management. To learn more, contact :

Anthony J. Fardella, Regional VP, 201-661-2491
Kevin McGuire, Account Manager, 201-661-2492