First Time Funds: The fundraising environment is strong; the fundraising process is hard

Raising capital for a first time private equity fund is difficult. First time fund managers often are surprised by how long it takes to secure enough capital commitments to hold a fund’s initial closing, particularly when seeking commitments from institutional investors. The good news is that first time funds have recently been in favor with …

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Adviser Sanctioned for False Statements to Prospective Investors

The Securities and Exchange Commission sanctioned a private equity fund adviser and its chief executive officer for making false statements about the other investors that had committed to invest in one of the adviser’s private equity funds. As part of a settlement with the SEC, the adviser agreed to cease acting as an investment adviser …

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TPG Pays $12.8 Million to Settle Allegations that it Misled Investors

TPG Capital Advisors, LLC will pay $12.8 million to settle allegations that it misled prospective investors in three of its private equity funds. According to a settlement with the Securities and Exchange Commission, TPG misled prospective investors by failing to disclose its practice of requiring some portfolio companies to pay accelerated monitoring fees when certain …

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Attack of the Indirect Investor, Again

A Texas-based retirement fund that does not own any Uber securities sued Uber and its former chief executive officer Travis Kalanick for making misleading statements to investors. The retirement fund claims that it was harmed when the value of its indirect investment in Uber fell after investors learned that Uber was “operating a business far different than what investors had …

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SEC Targets Broken Deal Expenses, Again

By: Josh Watson Private equity firm Platinum Equity Advisors, LLC (Platinum) improperly charged broken deal expenses to three of its private equity fund clients, according to a settlement with the Securities and Exchange Commission on September 21, 2017. The settlement requires Platinum to reimburse its clients for $1.7 million of improper charges and pay a …

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OCIE Issues Risk Alert on Misleading Advertising Practices

By: Josh Watson The SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a risk alert on September 14, 2017 identifying misleading advertising practices that examiners have found during examinations of registered investment advisers. The misleading practices identified in the alert are those that are widely-known to be misleading. For example: (1) Presenting performance results …

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Attack of the Indirect Investor

A company’s indirect investors may sue the company and its principals for fraud, according to a recent federal court ruling in Robert Colman et al. v. Theranos Inc. et al. Private funds attorney Josh Watson discusses the case in his article "Attack of the Indirect Investor." He explains that investment managers who syndicate investment opportunities through single …

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Josh Watson Moderating Private Equity and VC Funds Program at ABA Business Law Section Annual Meeting

At this year's ABA Business Law Section Annual Meeting, private funds attorney Josh Watson will serve as the program chair and moderator for the program "End of Life Issues for Private Equity and Venture Capital Funds." The program will be presented by the Private Equity and Venture Capital committee and will cover issues faced by …

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The Risks of Using Finders and Unregistered Brokers

Private fund managers often use placement agents, finders, and other intermediaries to help raise capital for their investment funds. Using an intermediary that has failed to register as a broker-dealer, however, is fraught with risk. In his article "The Risks of Using Finders and Unregistered Brokers", private funds attorney Josh Watson cautions against using unregistered …

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Registration Exemptions for Investment Advisers

When may an investment adviser avoid registering with the Securities and Exchange Commission? Private funds attorney Josh Watson answers this question in his article "Registration Exemptions for Investment Advisers" that summarizes the requirements of two registration exemptions that are available to managers of private investment funds. To learn about the two registration exemptions read the …

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