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Full-Text Articles in Law

Private Equity Value Creation In Finance: Evidence From Life Insurance, Divya Kirti, Natasha Sarin Feb 2020

Private Equity Value Creation In Finance: Evidence From Life Insurance, Divya Kirti, Natasha Sarin

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This paper studies how private equity buyouts create value in the insurance industry, where decentralized regulation creates opportunities for aggressive tax and capital management. Using novel data on 57 large private equity deals in the insurance industry, we show that buyouts create value by decreasing insurers' tax liabilities; and by reaching-for-yield: PE firms tilt their subsidiaries' bond portfolios toward junk bonds while avoiding corresponding capital charges. Previous work on affiliated or "shadow" reinsurance and capital management misses the important role that private equity buyouts play as recent drivers of these phenomenon. The trend we document is of growing importance in …


Private Company Lies, Elizabeth Pollman Jan 2020

Private Company Lies, Elizabeth Pollman

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Rule 10b-5’s antifraud catch-all is one of the most consequential pieces of American administrative law and most highly developed areas of judicially-created federal law. Although the rule broadly prohibits securities fraud in both public and private company stock, the vast majority of jurisprudence, and the voluminous academic literature that accompanies it, has developed through a public company lens.

This Article illuminates how the explosive growth of private markets has left huge portions of U.S. capital markets with relatively light securities fraud scrutiny and enforcement. Some of the largest private companies by valuation grow in an environment of extreme information asymmetry …


Who Bleeds When The Wolves Bite? A Flesh-And-Blood Perspective On Hedge Fund Activism And Our Strange Corporate Governance System, Leo E. Strine Jr. Apr 2017

Who Bleeds When The Wolves Bite? A Flesh-And-Blood Perspective On Hedge Fund Activism And Our Strange Corporate Governance System, Leo E. Strine Jr.

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This paper examines the effects of hedge fund activism and so-called wolf pack activity on the ordinary human beings—the human investors—who fund our capital markets but who, as indirect of owners of corporate equity, have only limited direct power to ensure that the capital they contribute is deployed to serve their welfare and in turn the broader social good.

Most human investors in fact depend much more on their labor than on their equity for their wealth and therefore care deeply about whether our corporate governance system creates incentives for corporations to create and sustain jobs for them. And because …


Global Regulatory And Ethical Framework, Henry Ordower Jan 2014

Global Regulatory And Ethical Framework, Henry Ordower

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This chapter reviews statutory and court sanctioned private regulatory frameworks affecting the creation of private equity (PE) funds and their primary activity of acquiring corporate enterprises. The chapter reviews U.S. legislation regulating securities, investment companies, and tender offers, state antitakeover legislation, state court decisions on hostile corporate takeovers and “poison pill” defenses, as well as European Union directives on takeovers and alternative investment fund managers. It concludes that regulation in the United States has shifted the balance of power in corporate acquisitions to incumbent management. The chapter also examines the diametrically opposed ethical views of PE funds as investment entities …


The Taxation Of Private Equity Carried Interests: Estimating The Revenue Effects Of Taxing Profit Interests As Ordinary Income, Michael S. Knoll Nov 2008

The Taxation Of Private Equity Carried Interests: Estimating The Revenue Effects Of Taxing Profit Interests As Ordinary Income, Michael S. Knoll

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In this Article, I estimate the tax revenue effects of taxing private equity carried interests as ordinary income rather than as long-term capital gain as under current law. Under reasonable assumptions, I conclude that the expected present value of additional tax collections would be between 1 percent and 1.5 percent of capital invested in private equity funds, or between $2 billion and $3 billion a year. That estimate, however, makes no allowance for changes in the structure of such funds or the composition of the partnerships, which might substantially reduce tax revenues below those estimates.


Mother Jones Meets Gordon Gekko: The Complicated Relationship Between Labor And Private Equity, Matthew T. Bodie Jan 2008

Mother Jones Meets Gordon Gekko: The Complicated Relationship Between Labor And Private Equity, Matthew T. Bodie

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In 2007 private equity firms came under increasing scrutiny for the favorable tax treatment accorded to their fund managers' compensation. Labor, particularly the Service Workers International Union (SEIU), was instrumental in bringing this issue to the attention of the media and the public. However, SEIU's private equity campaign is just one way in which the union is pursuing its primary concern: increasing the ranks of its members. This Article examines the role that the SEIU private equity campaign plays both in the overall debate about private equity taxation as well as the union's negotiations with private equity firms. It argues …