Carlyle Proposes Lawsuit Ban In IPO Documents

Jan 26 2012 | 2:23am ET

The Carlyle Group is seeking to preemptively put a stop to one of the more unpleasant aspects of life as a public company: shareholder lawsuits.

Washington, D.C.-based Carlyle revised its initial public offering documents last week. Under the new terms, all shareholders will have to settle claims against the private equity giant at arbitration. Lawsuits in both state and federal court, including class-action lawsuits, would be barred, and all investors who buy Carlyle shares would automatically accept the provision. What’s more, all arbitration proceedings and awards would remain confidential.

The provision is a novel one: None of the private equity firms to precede Carlyle in the public markets sought to prevent their future shareholders from suing.

Whether Carlyle can make the provision actually stick is unclear—some experts are skeptical. Under U.S. securities laws, investors are forbidden from waiving their rights to seek damages. The Securities and Exchange Commission must approve Carlyle’s registration statement, including the arbitration provision, before the firm can list on the Nasdaq Stock Market.

All arbitration proceedings would take place in Wilmington, Del., Carlyle said.


In Depth

Q&A: Fund Administration Comes To The Cloud

Jul 14 2017 | 7:23pm ET

The fund administration sector has been steadily implementing new technology, such...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Rastegar: PE Real Estate Gains Momentum as Uncertainty Rises

Jul 21 2017 | 6:04pm ET

The steady march of equity markets and fundamental shift in the direction of Fed...

 

From the current issue of