The Capital Commitment

Proskauer on Private Equity Litigation

Timothy W. Mungovan

Timothy W. Mungovan

Partner

Timothy Mungovan is a partner in the Litigation Department, co-head of the Commercial Litigation Practice Group, co-head of the Private Equity & Hedge Fund Litigation practice and a member of the Private Investment Funds Group. Tim has an international practice in complex commercial litigation, advising public and private companies in a variety of areas, including securities, corporate governance, fiduciary obligations, investment management and financial services, fraud and trade secrets.

In addition to his regular commercial litigation practice, Tim focuses on disputes involving private investment funds including hedge, private equity and venture capital funds and other limited partnerships. He has advised funds, fund sponsors, investment advisers, managers, principals, feeder funds, institutional and individual investors in various disputes, including control contests, partnership disputes, restructurings, removal of a general partner and claims of fraud. He is widely recognized for litigating hedge fund fraud and representing investors in redemption disputes.

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Valuation of Illiquid Portfolio Investments – Avoiding Regulatory Risks with Form and Substance

For private fund managers, the valuation of privately-held securities has been subject to heightened regulatory scrutiny. As the IPO on-ramp for private “unicorn” investments has lengthened, fund managers may hold illiquid investments for longer-than-expected time periods—and valuation-related risks increase as the time lengthens between purchase and exit.  This is the second of two blog posts … Continue Reading

Proskauer Releases Regulation of Investment Advisers, the Definitive Guide by Regulatory Expert Robert Plaze

We are pleased to announce that Proskauer has released Regulation of Investment Advisers by the U.S. Securities and Exchange Commission, by Robert E. Plaze, who recently joined Proskauer as a partner.  Bob previously served as Deputy Director of the Division of Investment Management of the SEC.  This publication, which draws on Bob’s nearly 30 years … Continue Reading

The Top Ten Regulatory and Litigation Risks for Private Funds in 2017

Private investment funds and advisers are likely to face new regulatory challenges and increased litigation risks in 2017, not only because of a change in the administration, but also because many advisers have not corrected and aligned past practices with current regulatory guidance.  In this post, we have highlighted ten areas that should be on … Continue Reading

Six Reasons Why a Wholesale Repeal of Dodd-Frank is Unlikely

In the days following the November elections, U.S. President-elect Donald J. Trump promised that his Financial Services Policy Implementation team would be working to “dismantle” the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). However, a more recent account in the Wall Street Journal reported Mr. Trump’s transition team as tempering his promise in … Continue Reading

Outgoing SEC Chair Reflects on the Agency’s Enforcement Program and Advocates for Increased Authority

On November 18, 2016, outgoing SEC Chair Mary Jo White delivered a speech at New York University School of Law entitled “A New Model for SEC Enforcement: Producing Bold and Unrelenting Results.”  Chair White’s remarks covered a broad range of enforcement initiatives and outcomes from her tenure as SEC Chair.  This post summarizes the aspects … Continue Reading

SEC Shake-Up: President-Elect Trump Expected to Make Key Appointments

In the wake of the election of Donald Trump as the 45th President of the United States, Mary Jo White has announced her intent to step down from her role as Chair of the Securities and Exchange Commission.  Chair White, the 31st and one of the longest-serving Chairs of the SEC, will be leaving her … Continue Reading

Fund Restructurings: How to Navigate a Conflict-Rich Environment

The number of private equity fund restructurings is likely to rise in the coming years.  The current economic expansion will inevitably come to an end (at 87 months and counting, this expansion is already the third longest post-WWII) making exits more challenging, just as the terms expire on funds raised during the “golden era” (2003-2007). … Continue Reading

SEC Announces Record Number of Investment Adviser Cases for FY 2016

The Securities and Exchange Commission today announced its enforcement results for fiscal year 2016, reaching new highs in the number of actions filed and money ordered forfeited through disgorgement and penalties.  The SEC noted that it brought the most ever cases involving investment advisers or investment companies, including 8 enforcement actions related to private equity advisers, an area … Continue Reading

Putting a Premium on Illiquidity: Some Reflections on the SEC’s Scrutiny of Valuation Practices and Disclosures

Valuation is typically near the top of the list when the SEC’s enforcement division and exam staff disclose their priority topics for private funds.  We expect that trend to continue and, if anything, the focus on valuation is likely to increase, especially as the market for unicorns shakes out. That said, the SEC rarely challenges … Continue Reading

SEC Whistleblower Settlement Reminds Fund Sponsors to Review Organizational Policies and Procedures

A recent SEC settlement of whistleblower charges should serve as a useful reminder for private fund sponsors to conduct a comprehensive review of their policies and procedures. On August 10, 2016, the SEC announced that BlueLinx Holdings Inc., an Atlanta-based building products distributor, had settled charges that it violated securities laws by using severance agreements … Continue Reading

Whistleblower Concerns for Private Fund Advisers – Seven Mistakes To Avoid

As we have previously observed, private fund advisers face a difficult challenge when SEC guidance (in the form of a speech or a public enforcement order) indicates that certain long-standing practices may be contrary to the securities laws. What does an adviser do when its past practices appear, in hindsight, to have fallen short? While … Continue Reading

Webcast: The New Regulatory Landscape for Financial Institutions

Is your organization equipped to stay on top of regulator demands?  Join Proskauer’s Tim Mungovan, co-head of the Private Equity & Hedge Fund Litigation Group, and Marsh’s FINPRO U.S. Chief Innovation Officer Machua Millett on June 15 at 2:00 p.m. ET for a webinar on the new regulatory landscape for financial institutions. The webcast will … Continue Reading

SEC Announces Settlement with Adviser Found to Have Acted as an Unregistered Broker

The SEC is continuing its pattern of establishing “standards of conduct” for the private equity industry through speeches, enforcement actions, and public settlements. After foreshadowing its concerns in various speeches over the last three years, the SEC recently returned its attention to the “unregistered broker” issue.  In a settlement announced last week, the SEC asserted … Continue Reading

Regulatory Compliance Association’s Enforcement, Compliance & Operations (ECO) 2016 Symposium

Partners Timothy W. Mungovan (co-head of Private Equity & Hedge Fund Litigation Group) and Christopher M. Wells (head of Hedge Funds Group)  have been invited to join a large collection of senior regulators at the Regulatory Compliance Association’s Enforcement, Compliance & Operations (ECO) 2016 Symposium.  The conference will take place on Tuesday May 17 at … Continue Reading

Portfolio Company Litigation: Some Practical Considerations for Board-Designees of Private Funds

Individuals affiliated with private fund managers are increasingly being named as defendants in lawsuits involving fund portfolio companies, particularly where the fund controls one or more seats on the portfolio company’s board, or where an individual affiliated with the fund sponsor serves as a senior executive at the portfolio company. When an individual affiliated with … Continue Reading

Unicorns Under Scrutiny: The SEC Previews Its “Long Arm” Of The Law

As we previously discussed, SEC Chair Mary Jo White recently delivered the keynote address at the Silicon Valley Initiative hosted by the SEC-Rock Center for Corporate Governance at Stanford University.   While the speech and its focus on unicorns attracted some initial media attention, the subsequent response has been surprisingly muted given that Chair White provided … Continue Reading

A Commonsense Explanation of the SEC’s Regulation of Private Investment Funds

The SEC’s regulation of the private investment funds industry has generated significant attention and commentary, as well as a fair amount of hand-wringing.  From our perspective as lawyers, however, there is a relatively commonsense explanation for the SEC’s approach.  Rather than acting with a heavy-hand by imposing a comprehensive set of “regulations,” the SEC is … Continue Reading

2016 Hot Topics for Private Fund Sponsors

This year, private investment funds are likely to face increased regulatory scrutiny and litigation risk. This is due to several market developments, including transparency and compliance initiatives of limited partners. There are several areas that should be on every private fund sponsor’s list. Fees and expenses will continue to be a top priority for the … Continue Reading

SEC Staff Announces 2016 OCIE Examination Priorities

On January 11, 2016, the staff of the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) released its annual announcement on examination priorities in the coming calendar year. While the announcement contains broad and general descriptions of areas in which the staff intends to focus, there are several key … Continue Reading

SEC Action Highlights Importance of Proper Expense Apportionment

In November 2015, the SEC announced that it had reached a settlement with Cherokee Investment Partners, LLC and Cherokee Advisers, LLC, in connection with improperly allocating managers’ regulatory expenses to three funds they managed. Through this and similar actions, the SEC has clearly indicated the managers may assign to the funds they manage only those … Continue Reading

6 Questions PE Sponsors Must Ask About Their GPL Policies

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SEC Charges Private Equity Firm and Four Executives with Failing to Disclose Conflicts of Interest

On November 3, 2015, the Securities and Exchange Commission (SEC) announced that it had reached a settlement with Fenway Partners, LLC, a New York-based private equity firm, and several of the firm’s executives (the Respondents) in connection with a failure to disclose conflicts of interests to investors with respect to payments made by portfolio companies of … Continue Reading

SEC Sets Compliance Date for Pay-to-Play Rule’s Ban on Third-Party Solicitation of Government Entities

On June 25, 2015, the Securities and Exchange Commission (SEC) set a compliance date of July 31, 2015 for the ban on payments to third parties for the solicitation of advisory business from any government entity under Rule 206(4)-5 of the Investment Advisers Act of 1940 (Pay-to-Play Rule). At the same time, the SEC also … Continue Reading

Don’t Get Burned by the “Sunshine:” Risk Factors for Venture Capital Firms in an Era of Increasing SEC Scrutiny

Andrew J. Bowden, the Director of the SEC’s Office of Compliance Inspections and Examinations, gave a speech entitled “Spreading Sunshine in Private Equity” in May 2014. While sounding cheery, the “spreading sunshine” metaphor was an ironic evocation of Justice Brandeis’s famous statement that “sunlight is said to be the best of disinfectants” in response to … Continue Reading
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