When an investment manager sends a prospective investor the subscription package for one of its funds, the documents almost always contain a so-called "non-reliance" clause requiring the investor to disclaim reliance on any representation or statement not contained in the fund's governing documents and private placement memorandum. Those clauses are intended to protect the manager from potential liability arising from, among other things, statements made in meetings, teasers or pitch books concerning the merits of an investment in the fund. Their enforceability is nuanced, however, particularly under New York or Delaware law – commonly chosen to govern fund documents and disputes.
In a recent article for Hedge Fund Law Report, Jonathan Shepard, co-head of Pryor Cashman's Investment Management Group, along with Counsel Eric Dowell and Associate Lauren Cooperman, discuss how non-reliance clauses are treated by New York courts, including in a recent decision issued in the Southern District of New York, and provide practical guidance for asset managers and their legal advisors on crafting appropriate non-reliance clauses.
Read the full article in HFLR.
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