Course | Columbia Law School

This seminar will study private investment funds, with a particular focus on venture capital and buyout funds. It will also cover other forms of private equity funds, as well as hedge funds. Students will examine the economic and legal relationships between a fund's sponsor (i.e., the general partner) and a fund's investors (i.e., the limited partners), as well as the economic and legal relationships among a fund's managers, inter se. Areas of focus will include whether present-day funds, from an economic and legal perspective, are, in fact, structured in a manner that results in "alignment of interests" rather than "conflicts of interest" between fund sponsors and managers, on the one hand, and fund investors, on the other.

Other issues to be examined in the course include: (1) the regulatory framework within which private investment funds operate, including certain aspects of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and ERISA that relate to the offering and management of private investment funds; and (2) a discussion of certain tax considerations involved in structuring private funds, such as capital gain "carried interest" incentive arrangements.

A multidisciplinary approach will be used combining economic, tax and legal analysis of the subject matter. Guest speakers will include representatives of a leading private equity firm. Students will participate in a case study of such firm and a negotiation exercise involving the terms of a fund to be sponsored by such firm. Ideally students enrolled in this seminar will have some background in finance, accounting, economics, taxation and securities law. Although by no means essential, students may find some prior exposure to partnership taxation helpful.