Proskauer on Private Fund Litigation

Seetha Ramachandran

Partner

Seetha Ramachandran is a partner in the Litigation Department, and a member of the White Collar and Asset Management Litigation practices. An experienced trial and appellate lawyer, Seetha has conducted 10 criminal jury trials, argued 10 appeals before the U.S. Court of Appeals for the Second Circuit, and handled ancillary civil proceedings in forfeiture cases.

Seetha is a leading expert in anti-money laundering (AML), Bank Secrecy Act, economic sanctions and asset forfeiture matters. Her practice focuses on white collar and regulatory enforcement defense, internal investigations, and compliance counseling. She represents banks, broker dealers, hedge funds, private equity funds, online payment companies, and individual executives and officers in high stakes and sensitive matters. Seetha has deep experience representing institutions and individuals in financial penalty phase of criminal and regulatory matters, and is often retained to litigate forfeiture and restitution claims on behalf of victims and third parties in criminal cases, as well as handling these issues for individual defendants.

Seetha served as a federal prosecutor for nearly 10 years, including as Deputy Chief in the Asset Forfeiture and Money Laundering Section (AFMLS), Criminal Division, U.S. Department of Justice. She was the first head of DOJ’s Money Laundering & Bank Integrity Unit, where she supervised DOJ’s first major AML prosecutions, and oversaw all of the Criminal Division’s AML cases. In that role, Seetha coordinated closely with state and federal banking regulators, including FinCEN, the OCC and the New York State Department of Financial Services, giving her deep experience with how these agencies work together, especially in matters involving civil and criminal liability. Her work developing and charging criminal cases under the Bank Secrecy Act (BSA) formed the model for AML enforcement that regulators and prosecutors follow today.

Seetha also served as an Assistant U.S. Attorney for the Southern District of New York for nearly six years, in the Complex Frauds, Major Crimes and Asset Forfeiture units where she investigated and prosecuted white-collar cases involving a wide range of financial crimes, including bank fraud, mail and wire fraud, tax fraud, money laundering, stolen art and cultural property, and civil and criminal forfeiture cases.

Seetha is a frequent speaker and prolific author on topics including enforcement trends in the financial services industry, OFAC sanctions, effective AML programs and asset forfeiture.

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The Trend Continues: Increased Regulatory Focus on Privacy & Cybersecurity for Private Funds

Recent enforcement actions highlight the increased regulatory scrutiny that private funds may face with respect to internal cybersecurity protocols and responses to cyber-crimes and cyber incidents under new and updated cybersecurity laws. … Continue Reading

Regulators’ Increased Focus on GP-Led Secondaries and Continuation Funds

As IPOs and other traditional paths to liquidity for private assets have become more challenging, GP-led secondary transactions have emerged as a powerful and popular tool across closed-end private funds, leading to explosive growth over the last five years. And while macro factors influence their prevalence year over year, these transactions remain broadly popular across the … Continue Reading

Energy Transition: A New Risk Climate for Investors

Go to any private equity event in the last 12 months, and “energy transition” will have been discussed, meaning the shift in energy production away from fossil‑based systems to low or zero carbon ones. As fund managers continue to raise funds focused on investments in this sector, we see no reason for this trend to … Continue Reading

Ripples Following the SPAC Wave: Litigation and Regulatory Risks

It’s a pattern we often see in boom-and-bust cycles—disputes rising in the period after a wave crests. SPAC deal volume hit an unprecedented high in 2021, but then slowed down in 2022 alongside IPOs. However, the fallout from the SPAC wave will continue to unfold this year, generating increased regulatory attention and a growing number of … Continue Reading

Messaging Missteps: SEC’s Increasing Focus on Off-Channel Communications

The SEC’s Enforcement Division is conducting a sweep investigation of large investment advisers regarding their employees’ use of “off-channel” communications. The sweep, which has been widely reported in the press, focuses on text messages from personal phones, personal email, WhatsApp and other platforms not typically captured or monitored by advisers. The sweep is causing considerable … Continue Reading

SEC Overreach: Insurers Underwrite?

Implications of SEC attempt to curb indemnification for private fund managers The SEC spent 2022 making multiple and sweeping proposals to amend rules under the Advisers Act, many of which have the ability to significantly re-shape market standards for private funds. Here, we focus on the SEC’s proposal to undo a common protection for private … Continue Reading

The New Reality: Valuation in a Volatile Market

Amid rising interest rates, tightening credit markets, geopolitical concerns in Europe and Asia, stubborn inflation and continuing supply chain issues, there is a growing sense of economic uncertainty. This uncertainty will no doubt increase the frequency of valuation disputes in the year ahead. We generally see valuation disputes spring from four primary sources: Valuation disputes … Continue Reading

The SBF Superseder: A Second Bite at the Scienter Apple

By William Komaroff and Seetha Ramachandran on April 6, 2023 Posted in Compliance, Cryptocurrency, Disputes, Enforcement, News, White Collar

Following the collapse of FTX and the civil and criminal enforcement actions arising from FTX’s and its founder’s alleged misconduct, partners Bill Komaroff and Seetha Ramachandran offer their reactions to the superseding indictment of Sam Bankman-Fried (SBF) obtained on March 27, 2023 by the U.S. Attorney’s Office for the Southern District of New York (SDNY). Read the … Continue Reading

Crypto Contagion – Managing Risk on Multiple Fronts

Crypto firm bankruptcies and resulting disruption in the crypto ecosystem will continue to exacerbate liquidity and regulatory concerns in this space. Signs of contagion are evident as prices of almost every cryptocurrency type have halved in recent months. Since all participants supporting the crypto ecosystem are at risk, managing that risk is critical.… Continue Reading

Portfolio Companies in Distress: Navigating the Risks from SVB and Other Threats to Liquidity and Solvency

Everything, everywhere, all at once is our risk thesis for 2023, but one must not forget about concentration risk. This issue has rocketed up diligence agendas for LPs and GPs alike as the collapse of Silicon Valley Bank proved it really was the bank for venture capital.The entry of SVB into receivership on March 10, 2023 highlighted just … Continue Reading

Top Ten Regulatory and Litigation Risks for Private Funds in 2023

Everything, everywhere, all at once, as a descriptor, captures the litigation and regulatory risks for the asset management industry in 2023. Every corner of the market faces greater risks than at any time since 2008. After years of breakneck growth fueled by low interest rates and a largely laissez faire regulatory regime, significant change is … Continue Reading

SBF Prosecution Raises Novel Issues for Asset Forfeiture and Victim Restitution

By Seetha Ramachandran on December 19, 2022 Posted in Asset Management, Compliance, Cryptocurrency, Disputes, Enforcement

The crimes charged against SBF are simple — old-fashioned fraud through a Ponzi scheme. His conviction seems inevitable. For the government, the challenging part of this case will be the forfeiture proceedings. Under the Mandatory Victim Restitution Act (MVRA), federal prosecutors have an affirmative obligation to use their “best efforts” to see that crime victims are … Continue Reading

Portfolio Company Risk: Plaintiffs Set Sights on Sponsors and Board Directors

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Robert Sutton, Julia Alonzo, James Anderson, Julia M. Ansanelli, Adam L. Deming, Reut N. Samuels and Hena M. Vora on June 2, 2022 Posted in Asset Management, Compliance, Disputes, Enforcement, Private Equity, Private Equity Litigation

As our other Top Ten posts have demonstrated, there is no shortage of risks for private fund sponsors to navigate in today’s economic and regulatory environment. Nevertheless, they need to prioritize the risk that hits closest to home – lawsuits by private litigants seeking to pull sponsors, their funds, and their board director designees into … Continue Reading

Conflicts of Interest: How High Will the Bar be Raised?

The SEC last month proposed rules under the Advisers Act indicating a dramatic shift in how the SEC intends to reduce conflicts of interest involving private fund managers and their investors. As we previously noted in the context of increased disclosure obligations, the SEC’s recent approach previews a sea change redefining the relationship between private … Continue Reading

The Trend of Increasing Disclosure Obligations for Private Funds Continues in 2022

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, William D. Dalsen, Adam L. Deming, Reut N. Samuels and Hena M. Vora on April 7, 2022 Posted in Asset Management, Compliance, Enforcement, Hedge Funds, Private Equity, Regulation, SEC, Securities Law

Last month, the SEC proposed new rules under the Advisers Act that, if implemented, would be the most significant enhancement of disclosure obligations for private fund managers since the Dodd-Frank Act. Citing investor protection and transparency concerns for limited partners as investors, these proposals signal the Commission’s intent to add additional tools to the fund … Continue Reading

Insider Trading, MNPI and Related Internal Controls: A Renewed Focus by SEC

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Dorothy Murray, Timothy W. Mungovan, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, William D. Dalsen, Adam L. Deming, Reut N. Samuels and Hena M. Vora on March 24, 2022 Posted in Compliance, Enforcement, Examinations, Private Equity, Regulation, SEC, Securities Law

Over the past few years, the SEC has brought fewer insider trading and Material Non-Public Information (MNPI)-related cases compared to historical numbers. We expect to see a reversal of that trend in 2022. The SEC has provided some hints of its renewed focus on insider trading. First, even though the overall number of insider trading … Continue Reading

Increased Regulatory Focus on Privacy and Cybersecurity for Private Funds in 2022

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, William D. Dalsen, Adam L. Deming, Kelly McMullon, Reut N. Samuels and Hena M. Vora on March 16, 2022 Posted in Asset Management, Compliance, Cybersecurity, Disputes, Enforcement, Private Equity, Regulation

2021 continued the trend of increased regulatory focus on privacy and cybersecurity for private investment funds in the U.S. and abroad. There are no signs of the trend leveling off any time soon. One of the topics that captured our attention last year was the rise of ransomware. As previously shared, ransomware has evolved from … Continue Reading

Economic Sanctions and Asset Seizures: An Important Focus for the Biden Administration

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, Adam L. Deming, William D. Dalsen, Amy Gordon, Reut N. Samuels and Hena M. Vora on March 9, 2022 Posted in Asset Management, Compliance, Enforcement, Private Equity, Regulation, White Collar

Sanctions continue to be a dynamic area of regulation and enforcement. In its first year, the Biden Administration has already undertaken a number of different sanctions initiatives. The three examples below highlight the range of strategies employed and their potential ramifications for private investment funds.… Continue Reading

DOJ Task Force KleptoCapture to Target Russian Oligarchs

By Seetha Ramachandran, Hena M. Vora and Amy Gordon on March 7, 2022 Posted in Asset Management, Enforcement, News, Regulation, White Collar

Over the past week, the U.S., UK, and EU imposed sweeping sanctions rolled out by the US, in response to Russia’s invasion of Ukraine, outlined here. Also last week, the Department of Justice announced the launch of Task Force KleptoCapture to enforce these sanctions and seize assets belonging to sanctioned individuals and other criminal actors. … Continue Reading

Regulatory Shake-Out on Digital Assets: An Industry Waits for Additional Guidance

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, Julia M. Ansanelli, James Anderson, William D. Dalsen, Adam L. Deming, Reut N. Samuels and Hena M. Vora on March 1, 2022 Posted in Compliance, Cryptocurrency, Disputes, Enforcement, Hedge Funds, Private Equity, Regulation, SEC, White Collar

A threshold question in many cryptocurrency inquiries is whether the digital assets qualify as securities under the federal securities laws. If so, then they are subject to a full suite of federal securities regulations. If not, they still may be subject to AML and other DOJ regulations regarding currencies, as well as the Commodity Futures … Continue Reading

ESG: Practical Points For Where Market Practice and Legal Trends Collide

If 2021 was the year in which regulators and investors enthusiastically embraced environmental, social and governance (“ESG”) considerations, by creating new legal and regulatory frameworks, then 2022 will be the year for asset managers to identify and confront the practical challenges of integrating legal requirements and stakeholder expectations into investment policy and performance.… Continue Reading

Treating “Like for Like”: SPAC Disclosure, Marketing and Gatekeeping in 2022

We reported last year that unprecedented SPAC deal volume signaled an increased risk for disputes given their unique structure, including risks associated with disclosure requirements, material non-public information, valuation, and conflicts of interest. Our assessment proved prescient, as the SEC began to flex its enforcement muscles vis-à-vis SPACs as the year progressed, and took specific … Continue Reading

Decentralized Finance: The Next Frontier of SEC Enforcement

The SEC’s push to regulate the next generation of blockchain-based applications will likely give rise to disputes and enforcement actions, particularly in the developing decentralized finance (DeFi) space. Although DeFi has the potential to enhance or replace traditional financial products by speeding execution and reducing transaction costs using blockchain technology, the SEC presumes that actors … Continue Reading

Top Ten Regulatory and Litigation Risks for Private Funds in 2022

Last year, we wrote, “The regulatory and litigation risks for private funds are greater than at any time since the financial crisis in 2008.” That statement is even more true today. The Wall Street Journal recently published separate front-page stories on an SEC initiative to oversee large private companies and the explosive growth of the private … Continue Reading

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