Anne Beaumont Interviewed by Secondaries Investor on Caspersen Fraud
Friedman Kaplan partner Anne Beaumont spoke to Adam Le of Secondaries Investor regarding the recently reported fraud by a partner at private equity firm PJT. Former PJT partner Andrew Caspersen has been charged by the U.S. Department of Justice and the Securities and Exchange Commission with securities and wire fraud in connection with a scheme to defraud investors, including a charitable foundation. Ms. Beaumont noted that, “People see a nice, steady large return, and they hate to ask questions too hard because then they’re put in a position where they might need to pull their money or not invest. There’s really a psychological component to people not wanting to question a good thing.”
Ms. Beaumont was quick to point out that fraud happens in any industry. But she noted it was a wake-up call for investors in private equity, which is not subject to the same regulatory framework as hedge funds, for example, which have tighter scrutiny. While the impact of this case is not likely to affect the number of restructuring deals that get done or LPs’ attitudes towards them, one take-away is that it never hurts investors to exercise strict due diligence procedures, regardless of the financial sector or asset class. “Institutional investors in the hedge fund space have no problem being incredibly aggressive with managers and pushing them hard to get satisfactory answers,” Beaumont said. “The private equity space is going to have to learn to do that in a polite and thoughtful way.” The full text of the article can be read here.