Wall Street Journal Quotes Fadi Samman on Proposed SEC Rule Changes

For its article “Proposed SEC Rules Would Raise Scrutiny of Sponsor-Led Secondary Deals,” The Wall Street Journal quoted Akin Gump investment management partner Fadi Samman. The article looks at proposed rules from the Securities and Exchange Commission (SEC) that could increase the number of enforcement actions in adviser-led secondary transactions.

Among the proposed rules is one by which firms in adviser-led secondary deals would secure independent fairness opinions in order to ensure fair pricing for transactions. Said Samman, “The fairness opinion requirement is probably the least concerning piece of the rule, in part because many deals already were using fairness opinions and getting one is not some new exercise that people are unaccustomed to." He added that the proposed form PF changes, by comparison, have had less attention paid to them.

The article notes that there are still unknowns in certain areas as concerns best practices, including, for example, how much information should be supplied to fund investors through limited partner advisory committees, which must waive conflicts related to secondary transactions involving fund assets. Samman asked, “Am I simply telling them, ‘I’m doing one of these transactions, please allow me to proceed? Or does conflict clearance mean presenting to the [committee] a fulsome set of all the terms or material terms of the deal?” He noted that he would expect a more conservative take on that.

Samman also said that, were the proposed changes to take effect as currently constituted, he anticipates closer attention will be paid to information presented to fund investors before they decide to sell or take part in continuation deals.

Fadi Samman has written extensively on secondary transactions and SEC regulation and enforcement. Click here to read more.