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Quinn Emanuel Private Equity Litigation Practice Alert: Minimizing Exposure to SEC Examinations and Enforcement Actions

October 28, 2019
Firm Memoranda

Competition for investors, deals, and returns has led many private equity firms to modify their fee structures, alter their investment criteria and strategies, and expand their platforms. In some cases, this has led to new potential conflicts of interest. We are increasingly seeing situations where a fund’s disclosures or governance provisions have not kept up with the fund manager’s current practices. Some private equity sponsors have been lulled into a sense of complacency because of the SEC’s seeming focus in other areas. This is a mistake. In our view, it’s only a matter of time before the SEC begins to scrutinize the private equity industry more closely. Private equity firms can minimize their exposure by ensuring that their disclosures reflect or anticipate new business practices or conflicts of interest that have arisen or that might arise over the life of the fund.

Now is the time for private equity clients to evaluate the adequacy of their disclosures. To avoid protracted SEC examinations and potential enforcement actions, advisers should have their disclosures and operations reviewed by someone with the right skill set sooner rather than later—long before the SEC comes knocking.

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If you have any questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned in it, please do not hesitate to reach out to: 

Michael Liftik
Phone: + 1 202-538-8141

R. Brian Timmons
Phone: + 1 213-443-3221