Question
From: (redacted)
Sent: Wednesday, August 08, 2007 12:14 PM
To: Verne, B. Michael
Subject: Hedge fund fact pattern
Mike -
I hope all is well. I am a junior corporate associate who handles most of the HSR analysis in my firm's practice group, and I was presented with a fact pattern that is quite confusing, both in general and from an HSR perspective. You have been extremely helpful in the past, so I thought I would reach out to you to see if you have any advice. We are admittedly a bit light on facts at this time, so a determination as to when, if at all, a notification filing is required is impossible.
Generally speaking, we have a hedge fund that is acquiring voting securities of a publicly traded corporate issuer. The hedge fund itself is acquiring solely for investment purposes, but one of the persons affiliated with general partner of the hedge fund is a director of the corporate issuer. [It is currently unclear if the general partner "controls" the hedge fund.] Another complicating factor is that affiliates of the hedge fund independently own the issuer's securities.
I attached a Word file with a diagram of relationships involved, along with relevant facts and some possible lines of analysis. My instincts tell me the issue will ultimately be one of whether (a) the related parties' holdings are aggregated (i.e., whether the hedge fund is its own ultimate parent entity), and (b) hedge fund's multiple acquisitions of voting securities in the ordinary course will be aggregated with one another (and I think the answer to this is a big "yes"). The exemption for investment purposes is also a possibility, but I think having the director of the issuer involved creates a presumption against being able to rely on this exemption.
If you are willing to take a look at the attached I would greatly appreciate your time. I am generally available to discuss via phone or e-mail to the extent you are willing to help.
I look forward to corresponding with you.
Refer to image file for more information.