b'Top 5 Dangers continued from page 9or investor letters.They did not includelong term.Further, it is important to ensureThe true challenges in fund management a personal touch to their approach.Theyyou evaluate your offering documents tocome during economic crises such as this.It didnt answer investor calls, give them andetermine whether any revisions, additionalis imperative that fund managers consult with opportunity to ask questions, or presentdisclosures, or updates may be required.their experts and their advisors and execute a clear strategy and plan to protect theirusing best practices and sound business capital.These failures led to litigation and5. Insufficient Legal Protectionsjudgment.Utilizing best practices, avoiding SEC investigations. in your Offering Documents dangers such as those mentioned above, and operating with integrity will reduce 4. Deviating from the The last pitfall is very specific.Many fundsrisk, unnecessary legal bills, and protect the Offering Documents limited partnership agreements or operatinginvestors capital long term.agreements fail to grant sufficient authority Many fund managers are not fully aware ofand protection to the fund manager.Certain the terms, scope of authority, restrictionskey powers include discretionary authority or even business restrictions in their fundsto suspend withdrawals and distributions, offering documents.This creates significanthalt operations, raise additional capital, risk because continued deviation from thesecure their tenure as manager or general offering documents could amount to anpartner, and expand or contract the businessKevin Kim is an experienced corporate argument the fund manager violated Rulemodel.Further, many offering documentsand securities attorney with Geraci Law 10b-5 or committed securities fraud.fail to include sufficient indemnification andFirm, dedicated to providing reliable and arbitration provisions to ensure the fundinnovative legal solutions.Kevin focuses This becomes extra problematic when themanager is not buried in legal bills for doinghis practice on private placements and terms are so broad that the fund managernothing wrong.Finally, fund documentsother alternative investments for private operates inconsistently.For example, if aoftentimes fail to have up to date risk factorslenders, real estate developers, and other fund has a best efforts basis redemptionand disclosures. real estate entrepreneurs.Kevin has advised provision with no additional guidelines,and prepared hundreds of securities offerings it is important the fund manager utilizeWe strongly recommend fund managersincluding mortgage funds, structured and stick to a firm policy on redemptionshave their offering documents evaluated todebt offerings, real estate syndications, for investors.Deviation from this policy isensure they have the right components tocrowdfunding offerings, EB-5 projects, and too easy because the documents have nowhether the COVID19 storm.Qualified Opportunity Funds.strict guidelines.Further, continued and inconsistent deviation from an unwritten redemption policy will create arguments that one investor was treated preferentially over another, thereby supporting an argument for breach of fiduciary duty.Another problematic example is the fund manager deviating from the stated business plan in the offering documents.If your fund documents dont permit you to make certain types of loans, or exceed certain loan to values, it would be improper to do so without revising and disclosing these changes to the investors and giving them an opportunity to exit the fund.It is so common for funds to suddenly add new asset classes to their business model without verifying their capability to do this. It is imperative that fund managers consult with securities counsel consistently to ensure they are fully aware of their authorities as the fund manager but also to make decisions that will not create additional liability in the Page 10Summer 2020Points of Interest'