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Individuals affiliated with private fund managers are increasingly being named as defendants in lawsuits involving fund portfolio companies, particularly where the fund controls one or more seats on the portfolio company’s board, or where an individual affiliated with the fund sponsor serves as a senior executive at the portfolio company. When an individual affiliated with a fund manager is named as a defendant in a lawsuit involving a portfolio company, some important questions should be…
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 commonsense explanation for the SEC’s approach.  Rather than acting with a heavy-hand by imposing a comprehensive set of “regulations,” the SEC is implementing its regulatory regime primarily through a combination of examinations, enforcement proceedings, and speeches, with a clear focus on potential…
In-house counsel often communicate with corporate management under the assumption that these communications are protected by the attorney-client privilege— absent some type of unusual and extraordinary circumstance, such as waiver of the privilege or the crime-fraud exception. A surprising number of both in-house and outside counsel, however, are unfamiliar with the longstanding “fiduciary exception” to the attorney-client privilege. Forty-five years ago, in Garner v. Wolfinbarger, the Fifth Circuit allowed the attorney-client privilege of a…
On March 31, 2016, SEC Chair Mary Jo White delivered the keynote address at the Silicon Valley Initiative hosted by the SEC-Rock Center for Corporate Governance at Stanford University.  A substantial portion of Chair White’s remarks focused on “unicorns,” or private start-up companies with valuations exceeding $1 billion.  Chair White’s comments reflect the SEC’s apparent focus on, and concerns with, unicorn companies.  Specifically, Chair White voiced concern over the accuracy of the financial information used…
This year, private investment funds are likely to face increased regulatory scrutiny and litigation risk. This is due to several market developments, including transparency and compliance initiatives of limited partners. There are several areas that should be on every private fund sponsor’s list. Fees and expenses will continue to be a top priority for the SEC. Sponsors should perform a comprehensive review to confirm adequate disclosure of fund expenses. With a prediction of unicorn devaluations…
Private investment funds are likely to face increased regulatory scrutiny and litigation risk in 2016, not only based on the Securities and Exchange Commission’s focus on the industry but also due to transparency and compliance initiatives of limited partners and other market developments. We have highlighted several areas that should be on the top of every private fund sponsor’s list – and how to assess and manage the associated risks.…
With increased litigation risk from regulators and private parties, including limited partners and stakeholders in portfolio companies, private equity firms should re-examine their professional liability insurance policies. “One size fits all” policies that are not sufficiently tailored to meet evolving business needs present a risk.…
Private equity fund sponsors are facing increased litigation risk from regulators and private parties, including limited partners and stakeholders in portfolio companies.  As a result, private equity firms should re-examine their professional liability insurance policies to ensure that their coverage is properly aligned with this increasing risk. …
Private equity funds, and individuals affiliated with fund sponsors, are increasingly being named as defendants in lawsuits involving their portfolio companies.  This litigation risk arises most frequently where a fund controls one or more board seats on the portfolio company, or where an individual affiliated with the fund sponsor serves as a senior executive at the portfolio company. When a fund sponsor (or an individual affiliated with a fund sponsor) is named as a defendant…