Fadi Samman Quoted in Private Equity Law Report on Avoiding Parallel Fund Conflicts

Akin Gump investment management partner Fadi Samman has been quoted in the Private Equity Law Report article “Avoiding Parallel Fund Conflicts: New SBAI Standards and Case Study Provide Guidance for Mitigating Conflicts (Part One of Two).” The article discusses some of the key takeaways from a case study by the Standards Board for Alternative Investments (SBAI) pertaining to why fund managers decide to launch supplemental funds in parallel with their flagship funds.

PELR notes that the SBIA case study addresses some specific tools managers can use to address conflicts from managing parallel funds. One section of the study, according to the article, requires disclosure of the existence of parallel funds that use a “similar” investment strategy, not just the “same” strategy. As had been the case previously, the required disclosure is limited to the existence of those other funds, rather than any of their specific details.

Samman said the standards for disclosing a fund with “the same or [a] similar investment strategy” and its recommendations about delineating and mitigating potential conflicts could be helpful. He also cited the importance of disclosing potential conflicts, pointing out that “the first line of defense is disclosure,” which the case study is valuable for highlighting.

“Having an allocation policy that talks about conflicts and how you’re going to deal with them is important. Although those conflicts are not always easy to manage or fully resolve, investors need to be aware of them, and managers need to have a plan to deal with them,” Samman said.