Sullivan
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Sullivan's clients include both 1940 Act registered exchange traded funds and non-1940 Act exchange traded products. Our ETF clients offer a multitude of different investment strategies which span the range of sophisticated derivatives-based active strategies to index-based passive strategies. We serve as both Fund and Board counsel and often in both capacities. We pride ourselves on working with clients on product development ideas and translating those ideas into saleable products.

Product Development and Launch

Clients engage us early on to help them convert product development ideas into saleable and compliant products. We work with clients on product structuring, addressing such matters as the use of various derivatives-based strategies to gain certain market exposures and the possible use of Cayman-based subsidiaries for tax reasons. We help clients navigate issues with respect to a wide variety of product types, such as commodity-based products, currency funds, crypto-currency and bit-coin products, as well as equity, fixed-income, international and alternative funds.

We work with ETF sponsors to structure products in ways that achieve their business objectives and that comply with regulatory requirements. After we assist the sponsor with the proper structure of the product and the tools available to achieve their desired exposures, we will shepherd the funds through the SEC registration process (if required), the exchange listing process and work to obtain all regulatory approvals under the Investment Company Act and/or the Exchange Act, including obtaining necessary exemptive, no-action or other relief for product launch and operation. Additionally, we have worked with clients on various types of conversions, including conversions of mutual funds into ETFs and conversions of separately managed accounts into ETF, as well as traditional ETF reorganizations.

We will work with the sponsor on the development of its fund infrastructure, such as the establishment of a fund board, the development of a compliance program and all of the ancillary items associated with managing an ETF business.

Ongoing Representation

Once a fund is launched, we work with the Fund and its sponsor on all on-going matters relating to the operation of the Fund. These matters may include:

  • Development and review of Board meeting materials, including importantly the development of materials required under section 15(c) of the Investment Company Act relating to fund approvals
  • Advice and assistance in responding to new rules and regulations, such as the development of a derivatives risk management program and a liquidity risk management program. Advising on CFTC and NFA regulations and guiding CPOs/CTAs through the registration process, including with respect to applicable exemptions
  • Negotiating Authorized Participant agreements and negotiating agreements for over-the-counter derivatives
  • Negotiating all types of service provider contracts, including advisory and sub-advisory agreements, transfer agency and custody agreements in connection with the launch of new ETFs
  • Comprehensive tax advice on matters such as fund reorganizations and tax-efficient conversions of various product structures into an ETF format

Board Representation

We serve as independent legal counsel to the independent directors for many ETF clients. As independent legal counsel, we advise boards of directors on their ongoing oversight responsibilities as well as their specific duties and responsibilities under the Investment Company Act and the various exchanges on which the ETFs are listed. In this regard, we assist the independent directors in preparing for and conducting meetings of the Board. We will regularly meet separately with the independent directors, and we assist them in their important 15(c) review process.

Our goal is to help the Board to work collaboratively with the fund sponsor, while at the same time ensure that they continue to perform their role as “watchdogs” for the shareholders.