In the private equity world, partnership agreements have received praise from many corners for reducing the agency costs arising between the interests of fund managers and investors. This article sets out to assess contract design in private equity partnerships. The argument here is that the importance of many of these heralded contract design features has been overstated. Part II describes the legal rights of investors in private equity funds. By default, investors in private limited partnerships have limited rights to participate in day-to-day operations or challenge decisions of fund managers. As a result of this set of default legal rules, investors in these funds face a familiar agency problem. That is, fund managers may be emboldened to pursue their own self-interest at the expens...
The Federal Housing Finance Agency (FHFA) is issuing a final rule to restrict the regulated entities--the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises), and the Federal Home Loan Banks (Banks)--from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. This final rule is intended to protect the regulated entities from exposure to mortgages with certain features that may impair their value and increase risk to the financial safety and soundness of the entities. FHFA intends that the regulated entities develop reasonable means and appropriate methods to implement the rule in consultation with FHFA.
Delegation, "Double Delegation," and Privatization Public participation has long been a central preoccupation of administrative law, a context in which government-run administrative agencies exercise important policymaking responsibility without a direct democratic check by legislatures.4 Indeed, the "delegation problem" in administrative law theory arises specifically from the concern that legislatures may weaken public participation when they confer authority on administrative agencies.5 Accordingly, much of domestic administrative law is concerned with increasing public awareness, participation, and oversight through statutes and doctrines such as the Freedom of Information Act,6 the Federal Advisory Committee Act,7 inspector-general review,8 whistleblower protection statutes,9 ci...
(PCFRC) began its work as an official part of FASB's standards-setting process in January 2007. The PCFRC's role is to provide systematic input on on proposed and existing standards from a private company perspective. The PCFRC is jointly sponsored by FASB and the AICPA. The PCFR Task Force Report of 2005 reveals that approximately 30% of private companies release no financial statements to external users. US private companies that choose to issue financial statements have three alternatives: 1. apply GAAP in full; 2. report under GAAP, but depart from one or more requirements; or 3. adopt an "other comprehensive basis of accounting." At its first meeting, in May 2007, the PCFRC decided that its approach to considering prospective and ex...
This paper investigates how symmetrical learning activity is, between the public client and the private contractor in the contracting and operation of complex, long-term infrastructure projects. Drawing on empirical material from two United Kingdom (UK) private finance initiative (PFI) cases, the paper analyses differences in the absorptive capacity and learning capability between parties. It suggests the private contractor appears to be better equipped to acquire, embed and renew their learning. These findings reflect less than 5 years of a 30-year contract, suggesting a skewed (imbalanced) relationship, where the contractor gains more learning capabilities than the client. The paper concludes with implications for management practice and suggestions for future research directions.
The OCC, Board, FDIC, and SEC (individually, an ``Agency,'' and collectively, ``the Agencies'') are requesting comment on a proposed rule that would implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank Act'') which contains certain prohibitions and restrictions on the ability of a banking entity and nonbank financial company supervised by the Board to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund.
Munnell and Soto's (2007) work on the optimal age to initiate Social Security benefits for couples is extended to a model that adds withdrawals from private savings to Social Security benefits. Optimal retirement age is found to be a function of savings and the rate of return on those savings. Savings with zero or minimal return reduce or eliminate the motivation for postponing retirement. As the rate of return on those savings rises, delay becomes increasingly beneficial. A reduction in savings at retirement can result in several years of delay in retirement to achieve prior expected income with greater delays a function of the portion of expected retirement income to be derived from savings.
Many investors, including vulnerable senior citizens, are victimized each year in dubious securities offerings yet governmental regulators can do little to intervene. Utilizing the Rule 506 private placement exemption, promoters today can escape regulatory review by both federal and state securities officials. While states at one time served as "local cops on the beat" to protect their citizens, Congress in 1996 preempted state authority, thus creating a situation in which suspect investment schemes can proliferate below any governmental radar screen. This article questions the continued wisdom of this regulatory vacuum, especially in light of recent financial events. This article reviews the legislative history of this preemptive statute, the National Securities Markets Improvements Ac...
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