Publications
Fundraising – United States
The Private Equity Review
April 2023
Schulte Roth & Zabel partners Allison Scher Bernbach and Joseph A. Smith recently authored the U.S. Fundraising chapter for the 2023 edition of Law Business Research’s The Private Equity Review. The chapter provides an overview of the legal and regulatory frameworks for private equity fundraising in the United States. Allison and Joe also explore key developments in the PE space, reflecting on 2022 and offering insight into future predictions.
“As was the case for other economic sectors, 2022 was a fulcrum year for the private equity markets in the United States. The year was marked by the resurgence of inflationary pressures that had been unseen for a generation, in response to which central banks acted swiftly to end an era of cheap money, and recessionary fears further stoked by geopolitical events in Europe and Asia. By the middle of the year, these factors combined to make fundraising and deal underwriting much more difficult than they had been since the brief recession at the inception of COVID lockdowns in early 2020 and perhaps even the financial crisis of 2007 and 2008. Meanwhile, proposals to expand the federal regulation of private equity fundraising imposed additional burdens on the industry. Notwithstanding these challenges, robust fundraising earlier in 2022, combined with a general view by market participants that private equity business is fundamentally cycle durable, left fundamental long-term optimism unshaken.”
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Alerts
On June 28, 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rulemaking that would amend existing anti-money laundering/countering the financing of terrorism (“AML/CFT”) program[1] regulations to require that financial institutions establish, implement and maintain effective, risk-based and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process (hereinafter, “Proposed Rule”).[2] For purposes of the Proposed Rule, “financial institutions” include: banks; broker dealers; mutual funds; futures commission merchants (“FCMs”) and introducing brokers in commodities (“IB-Cs”); insurance companies; money services businesses (“MSBs”); casinos and card clubs; dealers in precious metals, precious stones or jewels; operators of credit card systems; loan or finance companies; and housing government sponsored enterprises.[3] In addition to establishing minimum risk assessment requirements for these AML/CFT programs, the Proposed Rule would require that financial institutions document each component of their AML/CFT programs and make this documentation available to FinCEN or its designee, which can include the appropriate agency to which FinCEN has delegated examination authority,[4] or the appropriate SRO.[5] The Proposed Rule would also require that these AML/CFT programs be approved and overseen by the financial institution’s board of directors or, if the financial institution does not have a board of directors, an equivalent governing body.
Alerts
On June 28, 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rulemaking that would amend existing anti-money laundering/countering the financing of terrorism (“AML/CFT”) program[1] regulations to require that financial institutions establish, implement and maintain effective, risk-based and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process (hereinafter, “Proposed Rule”).[2] For purposes of the Proposed Rule, “financial institutions” include: banks; broker dealers; mutual funds; futures commission merchants (“FCMs”) and introducing brokers in commodities (“IB-Cs”); insurance companies; money services businesses (“MSBs”); casinos and card clubs; dealers in precious metals, precious stones or jewels; operators of credit card systems; loan or finance companies; and housing government sponsored enterprises.[3] In addition to establishing minimum risk assessment requirements for these AML/CFT programs, the Proposed Rule would require that financial institutions document each component of their AML/CFT programs and make this documentation available to FinCEN or its designee, which can include the appropriate agency to which FinCEN has delegated examination authority,[4] or the appropriate SRO.[5] The Proposed Rule would also require that these AML/CFT programs be approved and overseen by the financial institution’s board of directors or, if the financial institution does not have a board of directors, an equivalent governing body.