The Capital Commitment

Proskauer on Private Equity Litigation

Proskauer Launches Private Equity SEC Enforcement Tracker

By Timothy W. Mungovan, Howard J. Beber, Stephen T. Mears, Samuel J. Waldon, Joshua M. Newville & Brian Hooven on July 22, 2019

Today, we are launching a proprietary database tracking all SEC enforcement actions involving private equity advisers. The tracker contains key information from the actions, including summaries of key issues, settlement terms, and relevant statutory provisions. The tracker will be an important resource for us and our clients, providing us with quick access to comparable cases and allowing us to identify important enforcement trends impacting private equity advisers as they develop. We are also making available…

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SEC Announces New Approach to Disqualification Waivers

By Samuel J. Waldon, Karen J. Garnett, Joshua M. Newville & Robert E. Plaze on July 8, 2019

On July 3, 2019, SEC Chairman Jay Clayton issued a “Statement Regarding Offers of Settlement” (the “Statement”), announcing important changes to how the SEC will consider future requests for waivers from disqualifications in settlements. The Statement may have been prompted by the Bad Actor Disqualification Act of 2019 recently proposed by Representative Maxine Waters. Regardless of the impetus, the Statement should provide settling parties with greater certainty regarding the waiver process. Importantly, the…

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SEC Fines Fund Manager $5 Million Over Undervaluation of Assets

By Joshua M. Newville & Brian Hooven on June 25, 2019

A recent action where the SEC focused on the presumably conservative undervaluation of assets suggests that it is more than willing to use valuation as a hook to deter “smoothing” of returns. As we previously noted, 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, failure to adhere to stated valuation policies/procedures…

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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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Proskauer on Private Equity Litigation

Blog Authors

Proskauer Launches Private Equity SEC Enforcement Tracker

SEC Announces New Approach to Disqualification Waivers

SEC Fines Fund Manager $5 Million Over Undervaluation of Assets

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

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