In a recent article for Law360, partners Katherine Ashton, Kenneth Berman, Julie Riewe, John Rife III and associate Norma Angelica Freeland explore the potential pitfalls of secondary liquidity solutions and how best to avoid them.

When properly executed, secondary liquidity transactions can satisfy all stakeholders by allowing some to realize value while others remain invested in the assets. They can also be rife with conflicts of interest. A vivid example of the possible pitfalls — and the vigilance of the U.S. Securities and Exchange Commission regarding fair disclosure — can be seen in the recently announced settlement between U.S. regulators and VSS Fund Management LLC. In this article, the authors consider the practical implications of the settlement for fund managers and parties to these secondary transactions. “The single most important point to be gleaned from the VSS case is the importance of full and timely disclosure,” the Debevoise team writes. “In transactions of this type, material information that is provided to the buyer should also be made available to prospective sellers before they are required to make a decision with respect to the offer.”

Beware Pitfalls In Private Equity Secondary Transactions
By Katherine Ashton, Kenneth Berman, Julie Riewe, John Rife III and Norma Angelica Freeland
October 3, 2018