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The Capital Commitment

Asserting Reliance on Compliance Consultants as a Defense: Admissibility and Effectiveness

By James Anderson, Joshua M. Newville, Robert E. Plaze & Samuel J. Waldon

October 15, 2020

Asset managers commonly engage regulatory compliance consultants to aid them in addressing regulatory requirements and implementing compliance programs. The work of those compliance professionals can be drawn into SEC enforcement actions in various contexts. See, e.g., ZPR Investment Mgmt. Inc. v. SEC (compliance consultant resigned when advice not followed and testified in proceeding). One such context is when a fund manager asserts reliance on advice of the compliance consultant as a defense to fraud charges. Earlier…

The Capital Commitment

European ESG Disclosure Requirements for Asset Managers

By Kirsten E. Lapham

September 24, 2020

New rules in Europe concerning sustainability-related disclosures in the financial sector will come into force from March 2021. Our UK regulatory specialists summarize the key aspects of the new ESG rules which will impact a wide range of financial services participants, including non-EU (i.e. U.S. fund managers) that market funds in the EEA. Read the full client alert here.…

The Capital Commitment

A Mix of Clarity and Confusion: Crypto Asset Law and Regulation in the UK

By Dorothy Murray & Nicholas Petrie

September 21, 2020

Just as U.S. regulators are wrestling with the question of how to regulate cryptocurrencies and digital assets, as reported here, the same questions are being asked in the UK. Some have been answered with refreshing clarity; some remain much more opaque. As with any new technology or asset, there are different spheres of legal and regulatory influence to consider. At the most basic, what is it? (a.k.a. Can I steal it? And can I…

The Capital Commitment

SEC Expands the “Accredited Investor” and “QIB” Definitions and the Permitted Scope of “Testing the Waters”

By Anthony M. Drenzek

September 21, 2020

The Securities and Exchange Commission (SEC) recently approved amendments to the definition of an accredited investor found in Rule 501(a) of the Securities Act of 1933 that will facilitate the ability of funds and other issuers to raise capital through private placements. Several commenters on the SEC’s proposed rule cautioned that a rise in civil litigation and regulatory actions would likely result from what would be generally perceived as a broadening of the accredited investor…

The Capital Commitment

FinCEN Explains What Guides Its Enforcement Decisions

By Seetha Ramachandran & Hena M. Vora

September 16, 2020

On August 18, 2020, the Financial Crimes Enforcement Network (FinCEN), which is the primary regulator and administrator of the Bank Secrecy Act (BSA), issued a statement on enforcement of the BSA. The requirements of the BSA typically apply to financial institutions, but in certain circumstances the Act applies to nonfinancial businesses and individuals.…

The Capital Commitment

Private Equity and Cybersecurity: A Guide to Preparing for and Responding to a Breach

By Alexandra V. Bargoot, Margaret A. Dale & Samuel J. Waldon

September 15, 2020

A cyber breach can have serious legal, financial, and reputational consequences for a fund sponsor, as described in our previous post. As such, cybersecurity threats must be treated as business risks, not just a potential IT problem. Senior management at fund sponsors should take the lead to ensure that the sponsor is taking appropriate actions to protect itself against cyber risks. There are several steps that senior management can guide the fund sponsor to…

The Capital Commitment

Proskauer Partner Joshua Newville Discusses the SEC’s Focus on Valuation of Private Fund Investments

By Joshua M. Newville

September 11, 2020

Proskauer partner Josh Newville discussed the SEC’s focus on valuation of private fund investments at the recent Securities Enforcement Forum West 2020. The global COVID-19 crisis has added a layer of complexity to the valuation process, requiring special care. As we predicted in our 2020 Top Ten Regulatory and Litigation Risks for Private Funds, ongoing economic uncertainty will likely lead to increased scrutiny on fund managers’ valuation of privately-held portfolio companies from…

The Capital Commitment

Five Principles For Accurate and Reliable Portfolio Company Valuations

By James Anderson & Joshua M. Newville

September 1, 2020

We have seen the SEC increase its focus on valuation of privately-held portfolio companies recently. The SEC’s increased focus is in line with our prediction made in the Top Ten Regulatory and Litigation Risks for Private Funds in 2020 post from the start of this year, and we expect the trend to continue. The global COVID-19 crisis has added a layer of complexity to the valuation process, which for illiquid assets can be challenging during…

The Capital Commitment

Poison Pills In the Wake of COVID-19: A Refresher on Terms and Variations of Shareholder Rights Plans

By David W. Heck, Michael E. Ellis, Louis Rambo & Samuel J. Waldon

August 31, 2020

Shareholder rights plans, commonly known as “poison pills,” are arrangements that can be used by companies to stave off hostile takeovers or activist investors seeking to exert control over a company without paying a control premium. A typical rights plan, if triggered, would allow all shareholders except the triggering person to purchase additional shares in the company at a substantial discount. The resulting share dilution makes it significantly more expensive for the triggering person to…

The Capital Commitment

A Fund Managers’ Guide to Maximizing D&O and E&O Insurance Coverage

By John Failla, Nathan Lander, Bradford Green & Joshua M. Newville

August 28, 2020

“A Fund Managers’ Guide to Maximizing D&O and E&O Insurance Coverage” examines best practices for fund managers—particularly in the current economic climate—for negotiating and obtaining strong insurance protection and maximizing recovery when claims arise. As the economic impact of COVID-19 continues to reverberate across all global industries, there is an increased risk of claims being asserted against private fund managers, their funds and portfolio companies, as well as key individuals, both in their capacity as…

The Capital Commitment

Proskauer on Private Equity Litigation

Blog Authors

Asserting Reliance on Compliance Consultants as a Defense: Admissibility and Effectiveness

European ESG Disclosure Requirements for Asset Managers

A Mix of Clarity and Confusion: Crypto Asset Law and Regulation in the UK

SEC Expands the “Accredited Investor” and “QIB” Definitions and the Permitted Scope of “Testing the Waters”

FinCEN Explains What Guides Its Enforcement Decisions

Private Equity and Cybersecurity: A Guide to Preparing for and Responding to a Breach

Proskauer Partner Joshua Newville Discusses the SEC’s Focus on Valuation of Private Fund Investments

Five Principles For Accurate and Reliable Portfolio Company Valuations

Poison Pills In the Wake of COVID-19: A Refresher on Terms and Variations of Shareholder Rights Plans

A Fund Managers’ Guide to Maximizing D&O and E&O Insurance Coverage

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