The SEC censured and fined the General Partner of a private partnership for failing to file the required notice and response to third party tender offers. The SEC faults the GP for failing to file a Schedule 14D-9 following the receipt of information of tender offers for more than 5% of the partnership’s interests. The Schedule 14D-9 is the method by which investors receive information about a tender offer and management’s response. Because no public market existed for the partnership’s interests, the failure to notify investors could have resulted in fewer investors selling their interests to the third party.
OUR TAKE: Closed-end funds that rely on tender offers for investor liquidity must ensure strict compliance with the arcane and voluminous tender offer rules. As the market for more esoteric products grows, the SEC will use the tender offer rules to ensure full and fair disclosure.