It is no secret that private equity firms have become a popular target for attack over the past few years, and there is no reason to think that trend will change this year. Since the Securities and Exchange Commission (SEC) announced in 2014 that over half of the private equity firms it examined were in violation of rules regarding fees and expenses (Andrew J. Bowden, Director, Office of Compliance Inspections & Examinations, SEC, Spreading Sunshine in Private Equity, Speech at Private Fund Compliance Forum 2014 (May 6, 2014)), there has been a significant uptick in enforcement actions. Last year alone, the commission increased staffing to its Private Funds Unit from 15 to 24. Private parties are following the SEC’s lead. Limited partners and portfolio company shareholders have been filing suit against general partners for everything from reducing company value to liability under the Employee Retirement Income Security Act. Below are the top five complaints you can expect to hear from the SEC and private parties in 2017 and how managers can minimize their exposure.
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