Bloomberg News

Senators Ask SEC to Reject Carlyle Push to Ban Shareholder Suits

February 07, 2012

Feb. 3 (Bloomberg) -- The U.S. Securities and Exchange Commission should deny Carlyle Group LP’s attempt to block future shareholders from taking the company to court, three Democratic senators said in a letter to SEC Chairman Mary Schapiro.

Carlyle’s provision “would unlawfully deprive investors of their ability to vindicate their statutory rights,” Sens. Al Franken of Minnesota, Robert Menendez of New Jersey and Richard Blumenthal of Connecticut wrote in the letter dated today, aiming to influence the agency as it considers the Carlyle public-offering filing that could set a precedent for future IPOs. The letter said the SEC should “maintain its longstanding policy of opposing the inclusion of provisions requiring mandatory arbitration of shareholder disputes.”

The Washington-based buyout firm amended a regulatory filing last month to require future shareholders to resolve claims against it through arbitration. The SEC, which blocked an initial public offering with a similar arbitration clause in the late 1980s, is deciding whether to allow Carlyle’s offering to proceed. Doing so would ban investors in Carlyle and any future company that follows in its path from taking disputes to court.

Christopher Ullman, a spokesman for Carlyle, declined comment on the letter.

“Carlyle’s blatant attempt to skirt accountability runs counter to the SEC’s mission of protecting and advocating for the rights of investors,” said Gary M. Paul, president of trial-lawyer group the American Association for Justice, in a statement yesterday.

--With assistance from Miles Weiss in Washington. Editors: Anthony Gnoffo, Gregory Mott

To contact the reporter on this story: Jesse Hamilton in Washington at

To contact the editor responsible for this story: Maura Reynolds at

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