Hedge funds

Tailored industry coverage

 

What are hedge funds?

Hedge funds are a type of investment partnership accessible to accredited investors. The fact  they often employ complex investment strategies means hedge funds and the managers who run them can be exposed to a variety risk. 

Capacity

$5M maximum limit.

Coverage & Benefits

Primary coverage:

  • Includes protection for private investment activities, tailored specifically to the hedge fund and ‘fund of funds’ space.
  • Coverage for inquiries of insured persons and crisis management expenses is also included, as is coverage for extradition costs. 
  • Additional limits are provided for independent directors.

Secondary coverage may include:

  • Cyber/Privacy to protect against data breaches and theft of sensitive information, 
  • Lender Liability, which covers claims related to lending activities,
  • Employment Practices Liability (EPL) to protect the company from lawsuits brought by employees,
  • Fiduciary, covers the liabilities of those responsible for managing employee benefit plans, and
  • Employed Lawyers for in-house attorneys. 
FAQs
  • Do you have the ability to offer cyber coverage?  

    Cyber can be included on this policy as a separate coverage part
     

  • I already buy D&O, why do I need to buy E&O? 

    D&O coverage generally excludes claims brought by customers or regulators alleging the failure to provide professional services. E&O is designed to provide that coverage.
     

  • Does your policy respond to an informal regulatory investigation? 

    While informal investigations do not traditionally meet the definition of claim, our policy can provide defense coverage for insured persons to respond to informal regulatory investigations. 
     

  • How does the policy respond when a legacy fund is wound down?

    So long as the policy is continuously maintained with us, coverage is for claims arising from wrongful acts while the fund was active.
     

  • Are GPs, Co-Investment Funds, AIVs and SPVs covered? 

    Yes
     

  • Would trade errors be covered under this policy and if not, could they? 

    Trade error coverage can be added to the policy.
     

  • Is there coverage provided for insured persons serving on the Board of Directors of a portfolio company? 

    There is Side-A coverage for such persons in excess of the portfolio company’s D&O insurance and ability to indemnify the insured person.

Related products

Package Hedge funds coverage with the following products: Cyber and Management Liability.

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Claims scenarios 

Not sure what risks our product covers? We’ve brought some scenarios to life.

Hedge funds

A hedge fund manager with a long operating history underwent its first SEC exam since registering after Dodd-Frank. The examiners found marketing material that they felt misrepresented the past performance of the fund. The issue was brought to the attention of the SEC’s enforcement division, which triggered a formal order of investigation. The SEC eventually dropped the investigation without filing charges, but not before the fund manager had incurred millions of dollars in defense costs. 

Hedge funds

A hedge fund manager with a long operating history underwent its first SEC exam since registering after Dodd-Frank. The examiners found marketing material that they felt misrepresented the past performance of the fund. The issue was brought to the attention of the SEC’s enforcement division, which triggered a formal order of investigation. The SEC eventually dropped the investigation without filing charges, but not before the fund manager had incurred millions of dollars in defense costs.