Private Equity Compliance

CHAPTER 1Introduction to Private Equity Compliance

1.1 INTRODUCTION

At its most basic level the term compliance refers to a series of rules and regulations that are applicable to an organization. Most commonly these rules come from laws that are passed by legislative bodies in order to enforce a series of acceptable market practices. The focus of this book is on the practices that a private equity manager and the funds they manage should adhere to in order to implement a program of compliance.

1.2 WHAT EXACTLY IS PRIVATE EQUITY?

The term private equity is utilized in many different contexts in the investment world. Traditionally, private equity has referred to an investment strategy that seeks to invest in privately traded securities. This would be compared to strategies that seek to invest in public securities markets. In practice, private equity investments do not necessarily exclude investments in the public markets. An example of this would be what is known as a PIPE deal, which represents a private investment in public equity.

1.3 PRIVATE EQUITY TERMINOLOGY

Before proceeding with our discussion of the policies and procedures that constitute a private equity compliance program, it is first helpful to clarify specific terminology to ensure that readers are consistent in their understanding of key terms. The explanation of these terms will also assist with a practical perspective as to how they are commonly utilized among private equity professionals in the marketplace: ...