Investor, Beware: Was Your Fund Really Formed in an Investor Friendly Forum?

New York Law Journal
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PUBLISHED ON: November 13, 2018

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Investors are solicited every day by professionals looking for investments in vehicles where capital is raised, put into a common fund or pool, possibly leveraged, and then invested in private or public securities. This is how venture capital, angel investing, private equity, and hedge funds all work. Investors usually don’t invest their money in these funds without considering the investment goals and strategies of the investment professionals. That’s sensible. Rational investors consider their risk tolerance, their comfort with the strategy to be deployed, and the different circumstances under which they can get their money back as they may desire. Few investors, however, consider the legal implications associated with the investment managers’ choice of entity and the state in which that entity was formed and what all that might have to do with their investment. Those choices may have significant ramifications.

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