LEGAL RESPONSIBILITY IN CIVIL PROCEDURE

The article presents the results of the author’s dissertation research on legal responsibility in the civil procedure. The author substantiates the conclusion of the broadest interpretation of the civil procedure, according to which it should include: 1) judicial civil procedure: civil procedure, arbitration procedure, administrative procedure (legal proceedings); 2) out-ofcourt civil procedure: notary, enforcement proceedings, mediation, pre-trial conflict resolution, arbitration. Legal liability in civil proceedings should be understood as a type of state coercion, which consists in the subject of civil proceedings undergoing the adverse consequences provided for by the rule of law for a procedural offense committed by them in civil proceedings. The author also distinguishes between the concepts of responsibility in civil proceedings and civil procedural responsibility. Civil procedural responsibility should be understood as a subspecies of procedural responsibility, which is the obligation of the subject of civil procedure to undergo adverse procedural consequences provided for by the norm of civil procedure law, affecting the course of the procedure, for the procedural offense committed by him. Accordingly, it is proposed that court fines, performance fees, and compensatory (legal) liability (payment of court expenses, compensation for actual loss of time) should be attributed not to procedural, but to material and legal liability implemented in civil (civil) proceedings. The general state of implementation of civil and procedural liability measures in various branches of the civil procedure is clearly demonstrated in the form of a comparative table.

Opacity in Hedge Funds: Does it Create Value for Investors and Managers?

This paper investigates if opacity (as measured by derivatives usage) creates value for investors and the managers of hedge funds that charge performance fees. Since we do not identify a positive relation between opacity and managers’ revenue, it is not possible to state that opacity is a source of manager’s value creation for hedge fund investors and managers. However, considering that opacity is positively associated with risk-taking and negatively related with investors’ adjusted returns, we suggest policies aiming at protecting investors, especially those less qualified. We examine a unique and comprehensive database related to the positions in derivatives taken by managers, which was enabled due to specific disclosure regulatory demands of the Brazilian Securities Exchange Commission, where detailed information on hedge funds’ portfolio allocation should be provided on a monthly basis.

Hedge Fund Franchises

We investigate the growth strategies of hedge fund firms. We find that firms with successful first funds are able to launch follow-on funds that charge higher performance fees, set more onerous redemption terms, and attract greater inflows. Motivated by the aforementioned spillover effects, first funds outperform follow-on funds, after adjusting for risk. Consistent with the agency view, greater incentive alignment moderates the performance differential between first and follow-on funds. Moreover, multiple-product firms underperform single-product firms but harvest greater fee revenues, thereby hurting investors while benefitting firm partners. Investors respond to this growth strategy by redeeming from first funds of firms with follow-on funds that do poorly. Empirically, the multiple-product firm has become the dominant business model for the hedge fund industry. This paper was accepted by Tyler Shumway, finance.