William W. Clayton (Brigham Young University – J. Reuben Clark Law School) has posted Private Equity Fund Bargaining: What We Know (and Don't Know) on SSRN. Here is the abstract:
Recent regulatory developments in the United States have forced a reckoning with the following question: How much do we really know about the general partner-limited partner relationship in private equity funds, and how much does that knowledge tell us about how private equity funds should (and should not) be regulated? Starting in 2022, the top U.S. securities regulator (the “SEC”) commenced a rule-making process that proposed to overhaul and dramatically expand the SEC’s traditional oversight of the private funds industry. This initiative put unprecedented pressure on both sides—those in support of increased regulation and those against it—to marshal their best arguments and best evidence in favor of their preferred outcomes, with paradigm-shifting consequences at stake. Ultimately, after a contentious and drawn-out public comment period, the SEC finalized a disclosure-based rule in 2023 that, while substantially less aggressive than the initial proposal, will nevertheless dramatically affect how the industry works.
Much can be learned from examining the evidence that was produced by policymakers, market participants, and scholars during this period, but perhaps even more important, much can also be learned from the evidence that was not produced. The SEC’s private funds rulemaking initiative thus provides important insight into the limits of our knowledge of private equity funds and where more research and data are needed to support an effective policy dialogue. This chapter, forthcoming in the Research Handbook on the Structure of Private Equity and Venture Capital, examines these issues and provides a summary of the relevant literature in this area.