The Capital Commitment

Proskauer on Private Equity Litigation

Rocky Mountain Securities Conference: A Review Of Enforcement

By Samuel J. Waldon & Hena M. Vora on June 11, 2019

The SEC, in conjunction with the Colorado Bar Association and Colorado Society of Certified Public Accountants, recently sponsored the 51st Annual Rocky Mountain Securities Conference featuring SEC officials and corporate experts from across the nation. Sam Waldon, partner at Proskauer and former Assistant Chief Counsel in the SEC’s Division of Enforcement, moderated a panel of expert practitioners on developments in securities enforcement and white collar defense. The following topics were discussed: 1. Current Commission…

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DC Circuit Opinion Reaffirms Fiduciary and Disclosure Obligations of Advisers While Rejecting SEC Finding of “Willful” Violations

By Joshua M. Newville, Samuel J. Waldon, Anthony Drenzek & Ariella Muller on May 13, 2019

The DC Circuit recently released an opinion addressing the SEC’s administrative findings against registered investment adviser The Robare Group (TRG) for failure to disclose alleged conflicts of interest. Although the court affirmed the SEC’s finding of a violation of Section 206(2) of the Advisers Act, it held that Commission could not find willful violations under Section 207 based on the same negligent conduct. The court’s analysis of 206(2) of the Advisers Act, the key negligence-based…

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Rent the Runway Walks into the Litigation Spotlight

By Hena M. Vora & Michael R. Hackett on April 23, 2019

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. The high-end rental clothing brand was launched in 2009 by female founders, including co-founder and CEO Jennifer Hyman. Rent the Runway’s third and largest round of funding took place during Hyman’s ninth month…

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Fraud Claims Against Startup Founder Involving Secondary Market Sales Demonstrate SEC Focus on Privately-Held Companies

By Joshua M. Newville & Brian Hooven on April 11, 2019

Last week the SEC announced a settlement of fraud claims against the founder of Jumio, Inc, a private mobile payments company, for misstating the company’s financial results and using those financials to sell his company shares on the secondary market. This case is a reminder that privately negotiated securities transactions and private, VC-funded companies are not exempt from regulatory scrutiny. As we observed in a number of settlements last year, the SEC will pursue…

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Delaware Chancery Declines Post-Filing Use of Section 220 Books and Records Inspection Request

By Hena M. Vora, Lucy Wolf & Michael R. Hackett on February 26, 2019

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 Court dismissed just such an action, characterizing the request for a books and records inspection after the filing of a lawsuit as “inherently contradictory” and an improper attempt to “sue first, ask questions later.”…

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The Top Ten Regulatory and Litigation Risks for Private Funds in 2019

By Timothy W. Mungovan, Samuel J. Waldon, Joshua M. Newville, Michael R. Hackett, Anthony Drenzek, William Dalsen, Brian Hooven, Alexandra V. Bargoot, Lucy Wolf & Hena M. Vora on February 20, 2019

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 increased regulatory scrutiny and litigation risk for advisers (and their funds) in 2019. With that backdrop, we are pleased to present our Top Ten Regulatory and Litigation Risks for Private Funds in 2019.…

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SEC Staff Announces 2019 OCIE Examination Priorities

By Anthony Drenzek on January 15, 2019

The SEC’s Office of Compliance Inspections and Examinations has released its annual priorities publication for 2019. Containing both a look back at the program’s accomplishments for fiscal year 2018 and a look forward into its initiatives for 2019, this annual report sets out important guidance for private fund managers in administering their compliance programs and preparing for an SEC examination. For additional guidance, please read our full client alert on this topic.…

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Valuation of Illiquid Securities as a Focus of Recent Enforcement Actions

By Joshua M. Newville & Brian Hooven on November 26, 2018

While the SEC consistently announces that valuation is a “key area of focus,” it is uncommon for regulators to “second guess” valuation determinations in the absence of other potential violations. However, recent actions would suggest that the SEC is particularly interested in the valuations and methodologies behind illiquid securities. As we have noted here before, although valuation can be more art than science, there are heightened regulatory risks in the following areas around valuation:…

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2018 Annual Review and 2019 Outlook Highlights Private Equity Fund Litigation Risk Areas

By Timothy W. Mungovan, Michael R. Hackett & Brian Hooven on November 19, 2018

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 the industry views and utilizes litigation are likely to lead to increased litigation risk for advisers (and their funds) in 2019. Below we have excerpted the areas that should be on the top of every adviser’s list as…

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Proskauer Private Investment Funds Group Releases 2018 Annual Review and Outlook

By Anthony Drenzek on November 15, 2018

Proskauer’s Private Investment Funds Group today released its 2018 Annual Review and Outlook for Hedge Funds, Private Equity Funds and Other Private Funds. This yearly publication provides a summary of some of the significant changes and developments that occurred in the past year in the private equity and hedge funds space, as well as certain recommended practices that advisers should consider when preparing for 2019. Highlights from the annual review include: A summary of…

The Capital Commitment

Proskauer on Private Equity Litigation

Blog Authors

Rocky Mountain Securities Conference: A Review Of Enforcement

DC Circuit Opinion Reaffirms Fiduciary and Disclosure Obligations of Advisers While Rejecting SEC Finding of “Willful” Violations

Rent the Runway Walks into the Litigation Spotlight

Fraud Claims Against Startup Founder Involving Secondary Market Sales Demonstrate SEC Focus on Privately-Held Companies

Delaware Chancery Declines Post-Filing Use of Section 220 Books and Records Inspection Request

The Top Ten Regulatory and Litigation Risks for Private Funds in 2019

SEC Staff Announces 2019 OCIE Examination Priorities

Valuation of Illiquid Securities as a Focus of Recent Enforcement Actions

2018 Annual Review and 2019 Outlook Highlights Private Equity Fund Litigation Risk Areas

Proskauer Private Investment Funds Group Releases 2018 Annual Review and Outlook

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