Ruling Against Sun Capital Could Have Wider Private Equity Impact

In a court case that could add a new risk factor to some deals, the First Circuit Court of Appeals last month ruled in favor of the New England Teamsters and Trucking Industry Pension Fund, which argued that two investment funds managed by Sun Capital Partners were liable for $4.5 million in pension liabilities for Scott Brass Inc., a Sun Capital portfolio company that want bankrupt in 2008, according to Buyouts, peHUB’s sister magazine.

PEGCC Appoints Judge President, CEO

Steve Judge was named president and CEO of the Private Equity Growth Capital Council. Judge succeeds Douglas Lowenstein, who stepped down last year. Judge has served as interim president and CEO of PEGCC since August 2011. The appointment is effective immediately.

Private Equity Growth Capital Council Names Judge President

The Private Equity Growth Capital Council has named Steve Judge, the council’s vice president of government affairs, as interim president and chief executive officer. Judge replaces Douglas Lowenstein, who is stepping down as CEO as of September 1. The Washington, D.C.-based group is searching for a permanent president and chief executive.

Another Argument For Back-ended Carry Distributions?

Buyout firms hardly buy into the argument that they could help trip another financial crisis. No matter. They now find themselves battling proposed rules limiting incentive-based compensation rooted in the premise that they could. The rules may also give limited partners a stronger argument for back-ended carry distributions.

It’s yet more fallout from the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted last summer, which requires buyout shops with more than $150 million in assets under management to register as investment advisers with the Securities and Exchange Commission. (Although the SEC has indicated it may extend the July 21 deadline to register, industry observers say it is unlikely that grass-roots efforts will succeed to repeal the requirement altogether.)

From the perspective of your run-of-the-mill buyout shop, the prospect of registering—necessitating the appointment of a compliance officer and the development of a compliance program—is viewed as burden enough. But Dodd-Frank has the SEC and other agencies piling ever more rules on their backs. This week the Private Equity Growth Capital Council weighed in with comments on one of the latest proposed rules, which would put limits on incentive-based compensation at covered financial institutions. Buyout shops with $1 billion more in assets—a good portion of the market—would likely have to comply. (Those with $50 billion or more in assets face additional restrictions.)

Jason Thomas To Join Carlyle In New Position: Director Of Research

Jason Thomas is joining The Carlyle Group in the next few weeks after nearly three years at the Private Equity Growth Capital Council, most recently as vice president of research, peHUB has learned.

Thomas is slated to become director of research at Carlyle, where he will be the first to hold that position, according to spokesperson Christopher W. Ullman. He will report to David M. Marchick, who is managing director and global head of external affairs, a group that handles communications and government relations for the firm. Ullman said he couldn’t elaborate on what Thomas’s role will be at the PE investment giant.

Bain Capital Drops Out Of PE Growth Capital Council

Bain Capital, one of the original members of the Private Equity Growth Capital Council, has not renewed its membership for 2011, the council confirmed for peHub. The firm no longer appears on the member list on the PEGCC website.

The departure marks a blow to the annual revenue stream of the council, which has been active of late in Washington D.C. in fights against raising taxes on carried interest and in improving the industry’s image. However, membership has also been growing since the council opened its doors to smaller buyout shops early last year, mitigating the loss.

Neither Bain Capital nor the council would comment on the annual dues that the firm has paid (nor would executives at Bain Capital comment on anything related to this story). However, that Bain Capital and its affiliates have an estimated $65 billion under management suggests the firm was paying as much as $750,000 per year, based on information supplied by PEGCC to sister magazine Buyouts in early 2010—see dues levels below.

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