When things go horribly wrong; Lehman, Madoff and the global financial crisis of 2008/2009.
In the third episode of our Funds Download podcast our host and the Global Head of Funds and Regulatory, Philip Graham, is joined by the Co-Head of Funds and Regulatory in the Cayman Islands, Matt Taber, the Global Head of Dispute Resolution, Phillip Kite and the Head of Dispute Resolution in the Cayman Islands, Nick Hoffman, to share their collective insights and knowledge acquired from the crash in 2008 and its aftermath.
- For both emotional and practical reasons funds couldn't easily suspend redemption rights, which was the key issue that lead to so much distressed fund litigation during this period
- Prior to September 2008 most funds had not remotely stress tested their documentation and were largely unaware of the mechanics available to protect their position
- Ponzi schemes remain a huge threat to the global economy, despite the lessons we all should have learnt from Madoff
- Independent directors on the board of the fund are an essential part of the infrastructure now and provide a huge level of experience which largely flowed out of this period
- Courts will carefully examine the fund’s contractual documents and note the specific rights and obligations that are set out. Fund boards should therefore follow these closely and promptly at all times, but especially during a potential crisis
- Prevention is better than cure. If you are uncertain about your fund documentation, please reach out to your Harneys contact for assistance or one of the key contacts listed as authors on this article
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