Investment Funds Litigation and Investigations

Davis Polk has built a reputation for advising many of the largest fund managers – as well as their principals, portfolio managers, traders and other key executives – in litigation, arbitration, regulatory inquiries and internal investigations. Our team works closely with lawyers from our distinguished fund formation and transactions practice to deliver the most efficient multidisciplinary services to our clients.

With a global network of litigators, renowned for their leadership in commercial disputes, securities litigation, regulatory enforcement and white collar criminal defense, we provide strategic advice to clients in key markets across North America, South America, Europe and Asia. When issues arise, we help funds evaluate the available options, assess risks and work to resolve disputes as quickly as possible while considering all of the economic and reputational factors.

Areas of Focus:

  • Breach of contract
  • Breaches of fiduciary duty
  • Valuation disputes
  • Trade allocation practices
  • Fee and expense allocations
  • Securities and fraud claims
  • Treatment of confidential information and insider trading
  • FCPA violations

Our practice involves representing investment funds in regulatory proceedings conducted by the SEC, DOJ, FINRA, CFTC, NYDFS, U.K. FSA, HKMA, and State regulators, including the State AGs. We have a long history of working directly with the various agencies and understand their structure, strategies and priorities.

Through collaboration and team work, our litigators and regulatory lawyers are able to provide clients with effective and efficient representation across a wide range of matters.

By the Numbers

In the past 5 years, we have advised:

  • 22 Hedge Funds
  • 20 Private Equity Funds
  • 4 Public Funds


Chambers USA:

  • Davis Polk has an “[i]n-depth knowledge of the SEC and CFTC as well as other regulatory bodies.” 
  • “Their strength is their insight not only into the law surrounding hedge funds but also into how other hedge funds, businesses and peers are functioning.” 
  • “Investment Funds Client Service Team of the Year,” 2015

Legal 500 U.S. – “Davis Polk & Wardwell LLP’s investment funds practice delivers ‘smart, sophisticated advice’.” 

Notable Matters

Litigation Assignments
  • Castleton Commodities.  We obtained a dismissal of claims against Castleton Commodities International LLC in connection with call rights under a Delaware LLC agreement which set forth contractual restrictions on liability claims against our client. Plaintiffs sought to avoid those restrictions by invoking common law doctrines including veil piercing, tortious interference, fraud, unjust enrichment, and the implied covenant of good faith and fair dealing. The dismissal was affirmed on appeal.
  • Corsair Capital. We successfully represented Corsair Capital in an ICDR arbitration with over $350 million at stake against a former business partner arising out of a complex Indian banking transaction. The transaction was also the subject of substantial related litigation and regulatory inquiries in India and of expedited litigation in Mauritius.
  • Credit Suisse Securities. We represented a unit of Credit Suisse Securities as plaintiffs in an action for fraud against a private equity fund in connection with more than $700 million in loans made by a Credit Suisse-managed fund. 
  • Metalmark Capital. We successfully represented a series of private equity funds managed by Metalmark Capital in a lawsuit alleging breach of contract that resulted in a summary judgment decision in Metalmark Capital's favor in the Commercial Division of New York Supreme Court. 
  • Amaranth.  We represented Amaranth in connection with an administrative proceeding before the Federal Energy Regulatory Commission and a class action alleging market manipulation in the Southern District of New York. 
  • GSC Group. We represented GSC Group and a hedge fund managed by GSC Group in litigation brought in the Commercial Division of New York Supreme Court. Plaintiff fund investors alleged that they suffered losses when the subprime mortgage debt instruments, in which the fund invested, deteriorated substantially. The Court dismissed all claims against GSC Group. 
Regulatory And Internal Investigations Assignments
  • Multibillion dollar fund. We represented a hedge fund with approximately $2 billion in assets under management and an analyst employed by the fund in connection with insider trading investigations by the DOJ and SEC.  After an extensive internal investigation into the relevant trading activity, the DOJ and SEC publicly announced their decision not to bring charges.
  • Billion dollar fund. We conducted an internal investigation on behalf of the board of a billion dollar fund managed by one of the largest U.S. asset managers in connection with an internal investigation triggered by an ex-employee who alleged accounting and other improprieties. 
  • Asset Management Firm.  We represented an asset management firm in connection with an inquiry from a state attorney general’s office concerning the propriety of investments made on behalf of the state’s public employee pension fund. The attorney general’s office took no further action upon reviewing the response we prepared for the client. 
  • Major Fund Complex.  We conducted an internal investigation on behalf of the board of directors of a major fund complex where the CCO resigned alleging issues with the compliance environment and level of support and cooperation that the CCO had received during her tenure. The SEC took no further action after reading the report. 
  • U.K. Adviser.  We represented a major U.K. adviser in connection with an internal investigation and negotiation with the SEC and the FSA over compliance and conflict of interest issues.
  • Investment Fund. We represent an investment fund in connection with an SEC inquiry into CDO-related issues. 
  • Galleon Group. We represented an individual in connection with the Galleon Group insider trading investigation. 
  • Private Equity Funds. We have represented numerous private equity funds in connection with SEC investigations into pay-to-play and fee and expense allocation issues.
  • Mutual Fund Independent Directors. We represented the independent directors of mutual funds in SEC investigations into disclosure and fiduciary duty issues.
  • Hedge Funds and Inside Information. We advise numerous hedge funds in responding to regulatory requests regarding specific transactions, in particular regarding potential insider trading, and we provide compliance training and advice on policies and procedures relating to non-public information and personal and family office trading.