FCPA Considerations for the Private Fund Industry: An Interview with Former Federal Prosecutor Justin Shur

The assets in private funds are growing faster than the number of investment opportunities, especially in discovered markets.  See “OCIE Director Andrew Bowden Describes the Primary Compliance Failings of Private Equity Managers with Respect to Fees, Expenses, Limited Partnership Agreements, Valuation and Marketing,” Hedge Fund Law Report, Vol. 7, No. 19 (May 16, 2014) (section on “Consolidation and Compression of Returns”).  As a result, private equity and hedge fund managers are looking with increasing receptivity at emerging markets, and, in some cases, frontier markets.  These are the faraway places where big, risky opportunities still live – where information remains asymmetric, access remains elusive and property rights remain in flux.  More often than not, these are also the places that rank low on Transparency International’s Corruption Perceptions Index.  Consequently, the Foreign Corrupt Practices Act – the U.S. statute prohibiting bribery of foreign officials – looms ever larger as private fund managers scour the globe for interesting ideas.  It comes up in fund raising from sovereign wealth funds; in structuring funds and transactions; in retaining finders, brokers, distributors and other third parties; in monitoring investments; in restructurings; in hiring; and in a wide range of other contexts.  See “Practical Considerations for Compliance by Hedge Fund Managers with the FCPA When Evaluating and Engaging Foreign Advisors in Connection with Foreign Bankruptcy Investments,” Hedge Fund Law Report, Vol. 4, No. 34 (Sep. 29, 2011).  In an effort to assist private fund managers in spotting FCPA-related issues and mitigating FCPA risk, we recently interviewed Justin V. Shur, a former federal prosecutor and now a partner at Molo Lamken LLP.  Our interview covered, among other topics: the relationship between investment control and FCPA risk; contract provisions to limit the FCPA risk raised by third parties; issues presented by deal finders and sovereign wealth funds; hiring risks and best practices; facilitation payments; how to handle an FCPA issue discovered during due diligence; and successor liability.  Shur will expand on these ideas at an event on June 3 at the CORE: Club in Manhattan.  The event is being sponsored by Molo Lamken, the Hedge Fund Law Report and our affiliated publication, The Anti-Corruption Report.  In addition to Shur, the event will feature panelists from Indus Capital, Seward & Kissel, Global Environment Fund and the U.S. Securities and Exchange Commission.

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