A significant shift in Delaware law is reshaping how courts evaluate conflicted transactions involving controlling stockholders, including private fund managers that control portfolio companies. The changes make applying procedural safeguards all the more important. Fund managers who ensure the proper process is followed may significantly reduce their litigation exposure from minority shareholders.
For decades, private fund strategies were the domain of institutional investors and the ultra-wealthy. That exclusivity is ending as private strategies migrate into retail vehicles designed to hold illiquid assets within a retail regulatory framework.
Many in the crypto space greeted the second Trump Administration with excitement. The first Trump Administration was crypto-friendly, but did not wholly overturn the existing securities framework for crypto assets. The Biden Administration was more skeptical of crypto, with then- Securities and Exchange Commission (SEC) Chair Gary Gensler embracing the Howey test for securities. Crypto supporters thought 2025 might bring about the industry’s holy grail: a crypto-friendly regulatory framework allowing for crypto trading and offerings without the risk of civil (or criminal) inquiries down the line so long as the framework was followed.
Choose your words carefully because careless words cost.
Never has this been more true than in disclosures about environmental, social and governance matters. As divergence between the US federal government and “red states” on the one hand, and the UK, EU, and certain US “blue states” on the other hand, solidifies, international asset managers and their underlying portfolio companies must navigate an increasingly narrow regulatory tightrope.
As has been widely reported, digital infrastructure has become one of the fastest growing investment structures in recent years, most recently driven by the explosion in demand from firms in the artificial intelligence (AI) industry. This in turn has led to unprecedented needs for capex spending for the construction, expansion and upgrading of data centers, cell towers and networks, fiber optics and other data transmission facilities and power production and transmission.
Amid a challenging environment for exits, especially in the wake of the recent market volatility, private fund managers continue to pursue alternative strategies, such as term extensions and liquidity solutions, to ride out the liquidity downturn. While these measures are designed to protect the value of the funds’ investments and are frequently requested by limited partners, they raise potential regulatory concerns that have been the subject of SEC scrutiny in the past. As noted by a senior staff member of the Division of Examinations in March, the SEC continues to conduct exams with a focus on the bread-and-butter issues like fees, conflicts and related disclosures. Therefore, as funds approach maturity, it is worth reviewing the areas that have received the greatest regulatory attention.
Private credit has become an essential source of financing globally, with fund sponsors enjoying strong demand from borrowers, market participants, and investors. However, as the industry’s “golden age” continues, regulatory scrutiny is growing. Media coverage and legislative inquiries have pressured agencies — particularly the SEC — to take action.
Confession: writing this in May 2025, we cannot predict with confidence what the rest of 2025 will bring. The year has already seen four months of change and upheaval – political, regulatory, and economic. The new US administration has touted a business-friendly regulatory environment, with actual and promised tax cuts and deregulation. However, geopolitical tensions, tariff trade wars and political instability have introduced new risks and created a climate of extreme unpredictability. We should expect 2025 to hold several surprises still, whether that is a breakout of peace or new political themes obtaining prominence in one or more jurisdictions.
As we head further into 2025, the landscape of SEC exams and enforcement is poised for significant shifts. How will the SEC adapt to emerging trends and evolving market dynamics? In the first issue of Beyond the Deal in 2025, four of our regulatory lawyers weigh in on what to
In its final Private Fund Adviser Rules adopted last year, the SEC dropped one of the more controversial proposed rules—the proposal to prohibit contractual exculpation or indemnification provisions that would shield or indemnify the adviser in matters involving the adviser’s negligence or breach of fiduciary duty. On its face, this was a concession to the fund management industry. However, the Rule’s Adopting Release asserted that the SEC believed the provision was not needed because the antifraud provisions of the Advisers Act already prohibited certain provisions that would be covered by the proposal. Because the SEC’s interpretation was based on current law (there is no grandfathering or “implementation date” in the future), we predict that contractual indemnification or exculpation provisions will remain firmly in the SEC’s sights for 2024. SEC exams and enforcement proceedings are likely to focus on these provisions, and they may be implicated in GP/LP disputes as well.