Wednesday, January 18, 2012

Carlyle Group's Ban on Shareholder Lawsuits

Bloomberg unveiled:

Carlyle Group LP, the Washington- based buyout company that’s preparing to go public, is seeking to bar its future shareholders from filing individual and class- action lawsuits.

The firm revised its governing documents last week to say that investors who purchase company shares must settle any subsequent claims against Carlyle through arbitration in Wilmington, Delaware. That could limit the ability of stockholders to win big awards for securities-law violations such as fraud, several attorneys said.

Will Bloomberg find how Carlyle's co-founders plan to retain control over executive compensation.  A publicly listed Carlyle won't appoint a board level committee on executive pay.  What are NASDAQ's standards?  Carlyle Group investors fork over the money and get few rights.

Update 2-2-12:  This story has legsBloomberg's PEU reporter asked Rubenstein about Carlyle's provision in its prospectus that investors not be allowed to sue the company. A friend wrote, "Rubenstein got a bit stroppy at that point and repeated that was not something he was going to comment publicly on. He gave no reason. But the reporter eased the situation by saying - 'fair enough.'"  Fair to the DBD's, Carlyle's triumvirate.