Carlyle Drops Class-Action Ban

PE firm amends IPO documents amid mounting opposition.

Carlyle Group LP abandoned a plan to ban shareholders from filing class-action lawsuits after U.S. regulators threatened to block a stock sale the private-equity firm is seeking to complete as soon as April.

The Washington-based firm amended the documents for its initial public offering on Jan. 10 to include a provision that would have required future stockholders to resolve any claim against Carlyle through arbitration rather than in court. The move provoked controversy among lawmakers and shareholder rights advocates, who urged the U.S. Securities and Exchange Commission not to approve the arbitration clause.

‘Done Its Job’

“If somebody tells you that you’re going to have a very different set of remedies if you make this investment, and you still want to invest, it seems to me government has done its job,” said Pitt, a Republican. “It would have passed on my commission.”

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