Economic headwinds and the interest rate environment that developed over the course of 2023 increased financial stress on portfolio companies and portend heightened litigation risk in 2024 for portfolio companies and their...more
In a wave of SEC rulemaking this past year, representing a “new world order” event akin to Dodd-Frank, the SEC has provided itself with a fresh set of tools to increase regulatory and enforcement scrutiny on private funds....more
3/26/2024
/ Conflicts of Interest ,
Corporate Counsel ,
Cybersecurity ,
Enforcement ,
Environmental Social & Governance (ESG) ,
New Amendments ,
New Rules ,
Portfolio Companies ,
Private Equity ,
Regulatory Agenda ,
Securities and Exchange Commission (SEC)
To understand the litigation and regulatory risks that are coming in 2024 for private capital, it is helpful to look back briefly on recent events. Arguably, the single most important event over the last 18 months was the...more
3/19/2024
/ Acquisitions ,
Asset Management ,
Cryptocurrency ,
Cybersecurity ,
Dispute Resolution ,
Enforcement Actions ,
Fund Managers ,
Hedge Funds ,
Interest Rates ,
Investment Management ,
Investors ,
Mergers ,
Private Equity ,
Private Funds ,
Regulatory Agenda ,
Regulatory Reform ,
Regulatory Requirements ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Technology Sector
Implications of SEC attempt to curb indemnification for private fund managers -
The SEC spent 2022 making multiple and sweeping proposals to amend rules under the Advisers Act, many of which have the ability to...more
As our other Top Ten posts have demonstrated, there is no shortage of risks for private fund sponsors to navigate in today’s economic and regulatory environment. Nevertheless, they need to prioritize the risk that hits...more
6/2/2022
/ Asset Management ,
Breach of Duty ,
Business Litigation ,
Commercial Litigation ,
Fiduciary Duty ,
Fraud ,
Fund Sponsors ,
Investment ,
Investment Funds ,
Investment Portfolios ,
Private Equity
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
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
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)
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
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
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
Private investment funds and advisers are likely to face new regulatory challenges and increased litigation risks in 2017, not only because of a change in the administration, but also because many advisers have not corrected...more
2/10/2017
/ Acquisition Agreements ,
Advertising ,
Business Development ,
Business Litigation ,
Capital Raising ,
Conflicts of Interest ,
Dodd-Frank ,
Financial Institutions ,
Financial Markets ,
Hedge Funds ,
Industry Examinations ,
Initial Public Offering (IPO) ,
Internal Controls ,
Investment ,
Marketing ,
Merger Agreements ,
OCIE ,
Pay-To-Play ,
Portfolio Companies ,
Private Equity ,
Private Funds ,
Public Offerings ,
Regulatory Oversight ,
Restructuring ,
Securities ,
Securities and Exchange Commission (SEC) ,
Snapchat ,
Unicorns ,
Valuation ,
Venture Capital ,
Whistleblowers
The number of private equity fund restructurings is likely to rise in the coming years. The current economic expansion will inevitably come to an end (at 87 months and counting, this expansion is already the third longest...more
The Securities and Exchange Commission today announced its enforcement results for fiscal year 2016, reaching new highs in the number of actions filed and money ordered forfeited through disgorgement and penalties. The SEC...more
10/12/2016
/ Administrative Proceedings ,
Disgorgement ,
Enforcement Actions ,
Financial Institutions ,
Financial Markets ,
Foreign Corrupt Practices Act (FCPA) ,
Investment Adviser ,
Penalties ,
Private Equity ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Whistleblower Awards ,
Whistleblowers ,
White Collar Crimes
The SEC’s regulation of the private investment funds industry has generated significant attention and commentary, as well as a fair amount of hand-wringing. From our perspective as lawyers, however, there is a relatively...more
5/9/2016
/ Breach of Duty ,
Conflicts of Interest ,
Duty to Disclose ,
Enforcement Actions ,
Fiduciary Duty ,
Fund Managers ,
Limited Partnership Agreements ,
Offering Documents ,
Private Equity ,
Private Investment Funds ,
Securities and Exchange Commission (SEC)