Over the past few years, the SEC has brought fewer insider trading and Material Non-Public Information (MNPI)-related cases compared to historical numbers. We expect to see a reversal of that trend in 2022.
The SEC has...more
2021 continued the trend of increased regulatory focus on privacy and cybersecurity for private investment funds in the U.S. and abroad. There are no signs of the trend leveling off any time soon. One of the topics that...more
Sanctions continue to be a dynamic area of regulation and enforcement. In its first year, the Biden Administration has already undertaken a number of different sanctions initiatives. The three examples below highlight the...more
3/9/2022
/ Anti-Corruption ,
Asset Management ,
Asset Seizure ,
Biden Administration ,
Economic Sanctions ,
Enforcement Priorities ,
Financial Transactions ,
Foreign Corrupt Practices Act (FCPA) ,
Foreign Policy ,
Foreign Relations ,
Global Magnitsky Act ,
Office of Foreign Assets Control (OFAC) ,
Private Investment Funds ,
Russia ,
SDN List ,
Ukraine ,
Virtual Currency
A threshold question in many cryptocurrency inquiries is whether the digital assets qualify as securities under the federal securities laws. If so, then they are subject to a full suite of federal securities regulations....more
3/1/2022
/ Anti-Money Laundering ,
BSA/AML ,
CFTC ,
Cryptocurrency ,
Digital Assets ,
Financial Services Industry ,
Financial Transactions ,
Howey ,
Investment Contract ,
Non-Fungible Tokens (NFTs) ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Unregistered Securities
If 2021 was the year in which regulators and investors enthusiastically embraced environmental, social and governance (“ESG”) considerations, by creating new legal and regulatory frameworks, then 2022 will be the year for...more
2/25/2022
/ Business Plans ,
Business Strategies ,
Capital Investments ,
Climate Change ,
Corporate Governance ,
Corporate Social Responsibility ,
Cryptocurrency ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
Investment ,
Private Funds ,
Publicly-Traded Companies ,
Sustainability
We reported last year that unprecedented SPAC deal volume signaled an increased risk for disputes given their unique structure, including risks associated with disclosure requirements, material non-public information,...more
The SEC’s push to regulate the next generation of blockchain-based applications will likely give rise to disputes and enforcement actions, particularly in the developing decentralized finance (DeFi) space....more
Last year, we wrote, “The regulatory and litigation risks for private funds are greater than at any time since the financial crisis in 2008.” That statement is even more true today....more
2/2/2022
/ Decentralized Finance (DeFi) ,
Digital Assets ,
Environmental Social & Governance (ESG) ,
Insider Trading ,
Investment Funds ,
Investment Management ,
Investment Portfolios ,
Private Equity ,
Private Funds ,
Risk Management ,
Special Purpose Acquisition Companies (SPACs)
Viewed as involving fewer regulatory hurdles than an IPO, SPACs became the most popular way to take a company public in 2020, and deal volume continued to rise in 2021. This increase in popularity brings increased attention...more
As litigation claims against portfolio companies have increased, so have accompanying claims asserted directly against funds (and their sponsors). Plaintiffs’ reasoning for including funds as defendants is no mystery: funds...more
Another source of litigation risk for fund sponsors are claims brought by portfolio company employees. Sponsors should be aware of these risks, particularly when the portfolio company is in distress or is considering a sale...more
Private funds frequently negotiate for special rights when making an investment in a portfolio company, such as the right to appoint one or more board directors, voting rights, and liquidation preferences. Fund sponsors often...more
This yearly report provides a summary of some of the significant changes and developments that occurred in the past year in the hedge fund and private equity spaces, as well as certain recommended practices that investment...more
Over the last few years, we have seen an uptick in litigation claims against sponsors and funds arising out of their interests in portfolio companies. A fund sponsor’s participation on a portfolio company board, in...more
Many portfolio companies continue to confront business disruptions as a result of the COVID-19 pandemic. Even prior to the pandemic, we were seeing an uptick in litigation claims against sponsors and funds arising out of...more
8/25/2020
/ Business Interruption ,
Coronavirus/COVID-19 ,
Corporate Financing ,
Corporate Governance ,
Fiduciary Duty ,
Fund Sponsors ,
Insolvency ,
Liquidity ,
Portfolio Companies ,
Private Equity ,
Private Equity Firms
The SEC has been active in the private equity space recently after being relatively quiet for some time. A recent enforcement action serves as a reminder for fund sponsors that regulators are continuing to look at fund...more
As COVID-19 continues to spread around the world, it has become apparent that it is having a significant impact on the global financial market, at least for the short- to medium-term. While the only constant is change, there...more
On January 13, 2020, the United States Supreme Court denied certiorari to an appeal of a June 2019 order from the United States Court of Appeals for the D.C. Circuit that dismissed an action seeking to invalidate certain...more
2/27/2020
/ Broker-Dealer ,
Compelling Governmental Interest ,
Denial of Certiorari ,
Financial Industry Regulatory Authority (FINRA) ,
First Amendment ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
MSRB ,
Pay-To-Play ,
Political Contributions ,
Quid Pro Quo ,
Regulatory Requirements ,
Rule G-37 ,
Securities and Exchange Commission (SEC) ,
Time-Barred Claims
The private fund industry is more in the public eye than ever before. Private capital and private markets have experienced massive growth over the last two decades, substantially outpacing the growth of public equity. We have...more
2/19/2020
/ Anti-Money Laundering ,
Capital Markets ,
CFTC ,
Cryptocurrency ,
Global Economy ,
Initial Public Offering (IPO) ,
Investment Banks ,
OCIE ,
Private Equity ,
Private Funds ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Venture Capital
As a further indication of the SEC’s focus on the asset management industry, on November 1, 2019 the Commission formally established an Asset Management Advisory Committee. This follows the SEC’s recent announcement of its...more
The Third Circuit recently issued an important decision for private fund advisors who serve on corporate boards. In a precedential decision on a matter of first impression, the Third Circuit distinguished the role of...more
There’s a new unicorn in town, and this time, it isn’t just another tech company. Rent the Runway, also known as RTR, is now officially valued at over $1 billion after its most recent funding round which raised $125 million....more
A recent decision by the Delaware Chancery Court suggests that a litigant might forego the ability to file a books and records request if it waits to do so until after the lawsuit is filed. Last month the Delaware Chancery...more
An increasingly sophisticated and active OCIE division, innovative market disruptors, a maturing credit cycle, and a philosophical change in how the private fund industry views and utilizes litigation are likely to lead to...more
2/21/2019
/ Cryptocurrency ,
Cybersecurity ,
Enforcement Actions ,
Fund Managers ,
Initial Coin Offering (ICOs) ,
Investment Adviser ,
Litigation Funding ,
OCIE ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Token Sales
In our recently released 2018 Annual Review and 2019 Outlook for Hedge Funds, Private Equity Funds and Other Private Funds, we note that innovative market disruptors, a maturing credit cycle, and a philosophical change in how...more