In an article published by Privcap on March 10, 2016, Edward H. Klees provides insight on whether private equity has an insider trading problem. Private equity deals with a ton of information, and depending on who you are, you get to see all of it, some of it or none of it. There are rules governing disclosure abound in public markets, mitigating the prospect of selective disclosure – revealing actionable intelligence to certain investors but not to others. Private equity has far less oversight. “Selective disclosure of material information puts the GP at risk of violating statutory or contractual standards of behavior even though the way to cure the problem – by sharing the information with everyone – would appear uncomplicated,” explains Klees. “The apparent unfairness of this, when coupled with the simplicity of a solution, could make it relatively easy for the SEC to assert a view.” You may view the full article here.
Kristen M. Chatterton