Top Ten Regulatory And Litigation Risks For Private Funds In 2021

The regulatory and litigation risks for private funds are greater than at any time since the financial crisis in 2008. Just a few examples prove the point: the pandemic (which caused extraordinary volatility in revenues and valuations for most asset categories); a new administration in Washington D.C. (with a more muscular regulatory agenda); continued proliferation of digital assets (and increased valuations in various cryptocurrencies); unprecedented activity in SPACs (many of which are merging with PE-backed portfolio companies) and PIPEs; and continued extraordinary growth in AUM in private equity and private credit strategies (making private funds nearly ubiquitous in the capital markets). Any one of these factors would materially increase risks for litigation and regulatory enforcement but taken together they present an enormous challenge for the private fund industry. Insurance companies seem to be anticipating a changed environment as well, as premiums for