Schulte Roth & Zabel partner Phyllis Schwartz was featured in a recent article in the Private Equity Law Report that explores the critical nature of access rights and the preparation of fund documents in relation to offering co-investments and pledge funds. Phyllis shared her perspective on the essential terms for negotiation within these documents and examined regulatory aspects that General Partners (GPs) should keep in mind. 

There has been a question as to whether a GP has a fiduciary duty to offer co‑investment opportunities to all LPs (Limited Partners) if any LP was receiving a co‑investment opportunity, Schwartz noted. Fund documents generally make it clear that co-investment opportunities can be offered to some and not all investors, and side letter provisions have evolved from acknowledging that LPs in PE funds have an interest in participating in co‑investments to granting priority rights, she explained. 

In regards to side letters addressing co-investment access rights, Phyllis noted that side letters sometimes provide that if an LP turns down their co‑investment right – or, in a pledge fund, if the investor does not take up the investment opportunity – then the GP or an affiliate may pick up that portion. 

Read the full article to learn more.

Schulte Roth & Zabel partner Melissa Goldstein recently spoke with FundFire for their coverage on the approved and scaled-back version of the proposed US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) rule, which is aimed at strengthening anti-money laundering (AML) and counter-terrorism financing practices for investment advisers. 

Melissa stated that the rule will have a “significant impact” on all asset managers, regardless of whether they already have voluntary AML procedures in place. “The rule is prescriptive in what is required, and these investment advisors will be subject to examination, and the penalties for violating these laws can be quite significant,” she noted. 

The rule, effective January 1, 2026, is a response to concerns about the use of investment advisers for money laundering related to foreign corruption, fraud and tax evasion. 

Read the article, “Fincen Adopts Narrower Anti-Money Laundering, Counter Terrorism Rule.” (subscription required)