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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

New Risk of Private Equity Fund Withdrawal Liability or Other Liability from Portfolio Company Pension Plans

Following a remand by the First Circuit Court of Appeals, a federal district court recently found that two affiliated private equity funds were jointly and severally liable for the withdrawal liability of a jointly owned portfolio company that previously participated in a multiemployer pension plan.

Terms to Know:

  • ​​Multiemployer pension plans are qualified retirement plans in which more than one employer participates pursuant to a collective bargaining agreement (such plans must meet requirements of ERISA, the Internal Revenue Code and
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The VCOC Exemption and Initial Fund Investments

It is common for private equity funds to have limited partners that are pension plans or other retirement vehicles subject to ERISA (“ERISA benefit plans”).  By having ERISA benefit plan limited partners, the assets of the private equity fund will be considered “plan assets” subject to ERISA, unless the fund is able to avail itself of an exemption.  In the event a fund’s assets are deemed to be plan assets, the fund becomes subject to strict ERISA rules, including those … Read More

New HSR thresholds were recently announced for 2016, and go into effect on February 25

These thresholds generally require HSR (Hart-Scott-Rodino Antitrust Improvements Act) filings for non-exempt transactions where:

  • The size of the transaction exceeds $78.2M (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 transaction has sales or assets over $312.6M and the other party has sales or assets over $15.6M

HSR filing fees will be:

  • $45K for transactions valued above $78.2M but less than $156.3M
  • $125K for transactions
Read More

BE-180 Benchmark Survey – Financial Services Transactions with Foreign Persons

Middle market and large players in the U.S. private equity market are familiar with making periodic filings with the U.S. Bureau of Economic Analysis. The BEA, an agency of the U.S. Department of Commerce, collects economic data regarding investments and transactions between U.S. and foreign persons (for example, foreign investment in the U.S., U.S. investment abroad, and international services transactions). Information is reported by way of five-year benchmark surveys as well as annual and quarterly surveys for cross-border investments … Read More

PE Firm Enters Into $39M Settlement with SEC

Blackstone Group LP, the world’s largest private equity firm, recently entered into a $39M settlement with the SEC for failing to fully disclose its fee practices. The practices involved accelerating monitoring fees to portfolio companies prior to their sale or IPO, thereby reducing the sale/IPO price. While the monitoring fees were disclosed to investors before they invested, the acceleration practice was not disclosed until later. The SEC also found that Blackstone received a “substantially greater” discount in legal fees, while … Read More