New HSR Thresholds Announced for 2017

The Federal Trade Commission has announced revised threshold amounts that require HSR (Hart-Scott-Rodino Antitrust Improvements Act) filings for non-exempt transactions. The new thresholds take effect on Feb. 27. HSR filings will be required where:

  • The size of the transaction exceeds $80.8 million (measured by the aggregate value of assets, voting securities and non-corporate interests being acquired); and
  • The size of one of the parties to the transactions has sales or assets over $323 million and the other party has sales
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Avoiding Fraud Claims with Disclaimers of Reliance

One of the critical considerations private equity funds have in selling their portfolio companies is the limitation of their liability for indemnity obligations after the closing. Great care is taken to negotiate limitations on liability, often in the form of temporal limitations, hurdles and caps and limitations on the types of losses recoverable.

A customary exception to these limitations exists for fraud perpetrated by the private equity fund in the sale. When fraud is implicated, most purchase agreements allow an … Read More

Head of SEC Announces Resignation

On Monday, Nov. 14, Mary Jo White, the head of the Securities and Exchange Commission (the “SEC”) announced that she will resign when President Obama leaves office; two years before the end of her term.  Over the past eight years, the SEC has played a major role in the Obama administration’s effort to regulate big banks.  However, White’s resignation opens the door to President-elect Trump’s promise to deregulate the industry, specifically by targeting the Dodd-Frank Act.… Read More

Long-Term Brexit Impact on US Middle Market Private Equity

On June 23, 2016, British voters surprised much of the world by voting in favor of “Brexit” in a 52% to 48% vote.  By now, most people that watch or read the news are familiar with the term Brexit, but for any uninitiated readers, Brexit is the withdrawal of the United Kingdom (“UK”) from the European Union (“EU”).  The Brexit vote on June 23 began a period of uncertainty that has shaken, to some extent, nearly every business sector in … Read More

SEC Proposes New Rule Effecting Registered Investment Advisors

On June 28, 2016, the SEC proposed a new rule applicable to private equity funds that are Registered Investment Advisors. The proposed rule would require these private equity funds to adopt and implement written business continuity and transition plans. The full text of the rule proposal is available at

The purpose of the rule is to ensure that private equity funds are addressing operational and other risks that could result from a significant disruption in their operations or … Read More

Unregistered Broker-Dealers and Private Equity Firms

On June 1, 2016, the Securities and Exchange Commission (the “SEC”) announced a settlement with Blackstreet Capital Management, LLC (“BCM”), a Maryland-based private equity firm, and its principal, Murry Gunty, that could negatively impact the ability of private equity funds to charge transaction fees in the future.[1]  Private equity funds have long charged fees at the closing of portfolio company transactions for their work in facilitating those transactions.  These fees have become an important aspect of private equity fund … Read More

SEC Audits of PE Firms: 3 Must Dos

As we have noted in earlier posts, the SEC has had increased authority over the private equity industry since Dodd-Frank was passed in 2010. Several years ago, an SEC official remarked that SEC exams “identified what we believe are violations of law or material weaknesses in controls over 50% of the time” (see below for link to quote). Not surprisingly, the Office of Compliance Inspections and Examinations of the SEC identified the examination of private fund advisors, with a focus … Read More

House of Representatives Attempting to Ease Regulation of Private Equity Funds

The Wall Street Journal recently reported that the House of Representatives is preparing legislation that would exempt private equity fund managers from rules that some say are burdensome.  Representatives Robert Hurt and Juan Vargas are authoring the bill, which would update current law to ease this burden.

The current law requires private equity fund managers with more than $150 million in assets under management to register and file reports with the Securities Exchange Commission.  The proposed bill, which has not … Read More

Taxation of Private Equity and the 2016 Presidential Election

The taxation of carried interests is a common topic of discussion and something that is watched closely by private equity fund managers who derive substantial income from these interests.  As background, private equity fund managers derive much of their income from management fees and carried interests.  While management fees are taxed at ordinary income rates, payments made in respect of carried interests are currently taxed at the much lower capital gains rate of 20%, thereby allowing fund managers to receive … Read More