Plaintiffs Can Pursue Narrowed Claims Against Private Equity Firms

According to the U.S. District Court for the District of Massachusetts, plaintiffs should be able to pursue narrowed claims against large private equity firms accused of colluding to keep competition away. In Dahl v. Bain Capital Partners LLC, Judge Edward Harrington noted that although the bulk of the securities lawsuit focused on PE firm’s routine business practices, there was evidence that showed an inference of conspiracy in regards of some of the claims.

Also, Harrington refused to grant an “omnibus” motion for summary judgment requested by several of the defendants, including Bain Capital Partners LLC, Carlyle Group LLC, and Kohlberg Kravis Roberts & Co. LP. JPMorgan Chase and Co.’s (JPM) own motion for summary judgment, however, was granted, on the grounds that evidence did not support that the financial firm had taken part in the alleged “narrowed overarching conspiracy.”

The plaintiffs previously owned shares in different public companies that private equity firms later acquired. They contend that between 2003 and 2007, the defendants were involved in an “overarching” conspiracy to artificially manipulate securities prices in specific transactions. The plaintiffs believe that the private equity firms knew that by working together they could keep the competition down and prevent prices from going up.

Harrington, however, decided to narrow the plaintiffs’ claims, finding that a lot of the lawsuit had to do with practices in the industry that were considered “appropriate” and “established.” He noted that rather than depicting a portrait of an “overreaching conspiracy,” the evidence of transaction appears to demonstrate interactions among defendants that were “ever-rotating and overlapping.”

Dahl v. Bain Capital Partners LLC

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Investment Fraud Lawsuit Against BlackRock Over Exchange-Traded Funds Could Shed More Light on Securities Lending, Institutional Investor Securities Blog, February 18, 2013

Texas Courts Show Preference for Arbitration to Resolve Securities Fraud Claims and Other Business Disputes, Stockbroker Fraud Blog, February 15, 2013

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