Protection of Private Equity Investors under the Dodd-Frank Act

Authors

  • Doris Toyou

DOI:

https://doi.org/10.5195/jlc.2019.159

Abstract

In securities law, investor protection means that an issuer of securities, here partnership interests for private equity, must register with the Securities and Exchange Commission (“SEC”) and be subject to disclosure, reporting, record-keeping compliance and examination programs. This Article argues that the Dodd-Frank Act has fulfilled part of its objective to protect private equity investors by forcing private equity managers to disclose information on their operations. Disclosure has provided greater transparency about how the business of private equity is conducted. The increased SEC scrutiny started in 2014 has uncovered unfair practices and violations of fiduciary duties that sophisticated investors could not detect on their own. Notwithstanding this improved transparency, the Dodd-Frank Act still falls short of imposing the main tool securities laws uses to protect investors: that is, full and fair disclosure. In other words, Dodd-Frank does not provide all the required protections that are important for investors to assess the quality of their investments and make informed decisions. This Article offers to expand transparency by additional public disclosure of investment returns, fees, and managers’ income.

For other policy issues unrelated to the protection of investors, that is, jobs or tax, Title IV of the Dodd-Frank Act does not offer the appropriate setting. Applying or enacting legislation concerning tax, labor or bankruptcy laws can better curve the controversial practices of private equity firms.

Downloads

Published

2019-04-24

How to Cite

Toyou, D. (2019). Protection of Private Equity Investors under the Dodd-Frank Act. Journal of Law and Commerce, 37(2). https://doi.org/10.5195/jlc.2019.159

Issue

Vol. 37 No. 2 (2019)

Section

Articles

License


Authors who publish with this journal agree to the following terms:

    1. The Author retains copyright in the Work, where the term “Work” shall include all digital objects that may result in subsequent electronic publication or distribution.

    2. Upon acceptance of the Work, the author shall grant to the Publisher the right of first publication of the Work.

    3. The Author shall grant to the Publisher and its agents the nonexclusive perpetual right and license to publish, archive, and make accessible the Work in whole or in part in all forms of media now or hereafter known under a Creative Commons 4.0 License (Attribution-Noncommercial-No Derivative Works), or its equivalent, which, for the avoidance of doubt, allows others to copy, distribute, and transmit the Work under the following conditions:
      1. Attribution—other users must attribute the Work in the manner specified by the author as indicated on the journal Web site;
      2. Noncommercial—other users (including Publisher) may not use this Work for commercial purposes;
      3. No Derivative Works—other users (including Publisher) may not alter, transform, or build upon this Work,with the understanding that any of the above conditions can be waived with permission from the Author and that where the Work or any of its elements is in the public domain under applicable law, that status is in no way affected by the license.

    4. The Author is able to enter into separate, additional contractual arrangements for the nonexclusive distribution of the journal's published version of the Work (e.g., post it to an institutional repository or publish it in a book), as long as there is provided in the document an acknowledgement of its initial publication in this journal.

    5. Authors are permitted and encouraged to post online a pre-publication manuscript (but not the Publisher’s final formatted PDF version of the Work) in institutional repositories or on their Websites prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work. Any such posting made before acceptance and publication of the Work shall be updated upon publication to include a reference to the Publisher-assigned DOI (Digital Object Identifier) and a link to the online abstract for the final published Work in the Journal.

    6. Upon Publisher’s request, the Author agrees to furnish promptly to Publisher, at the Author’s own expense, written evidence of the permissions, licenses, and consents for use of third-party material included within the Work, except as determined by Publisher to be covered by the principles of Fair Use.

    7. The Author represents and warrants that:

      1. the Work is the Author’s original work;
      2. the Author has not transferred, and will not transfer, exclusive rights in the Work to any third party;
      3. the Work is not pending review or under consideration by another publisher;
      4. the Work has not previously been published;
      5. the Work contains no misrepresentation or infringement of the Work or property of other authors or third parties; and
      6. the Work contains no libel, invasion of privacy, or other unlawful matter.
         
    8. The Author agrees to indemnify and hold Publisher harmless from Author’s breach of the representations and warranties contained in Paragraph 6 above, as well as any claim or proceeding relating to Publisher’s use and publication of any content contained in the Work, including third-party content.