Carlyle Seeks to Ban Investor Suits

Ahead of IPO, buyout firm says those who buy shares must arbitrate claims.

Carlyle Group LP, the Washington-based buyout company that’s preparing to go public, is seeking to bar its future shareholders from filing individual and class-action lawsuits.

The firm revised its governing documents last week to say that investors who purchase company shares must settle any subsequent claims against Carlyle through arbitration in Wilmington, Delaware. That could limit the ability of stockholders to win big awards for securities-law violations such as fraud, several attorneys said.

Carlyle, co-founded by David Rubenstein, William Conway and Daniel D’Aniello, is at least the fifth buyout firm to go public since Fortress Investment Group LLC held an initial public offering in February 2007, followed by Blackstone Group LP, KKR & Co., and Apollo Global Management LLC. Carlyle would be the first to impose an arbitration requirement, according to copies of the limited-partnership agreements the companies have on their websites or in SEC filings.

Blackstone was named in six 2008 lawsuits that were later consolidated into a class-action complaint alleging that the prospectus for the company’s IPO was false and misleading, in part because it overstated the value of the firm’s private- equity and real estate investments. The plaintiffs seek damages and costs, as well as other relief, Blackstone said in its latest quarterly report, adding that the case is “totally without merit” and that the firm intends to “vigorously” defend itself. Blackstone shares trade at about half the company’s June 2007 IPO price of $31 each.

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