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31 Bus. Law. 1489 (1975-1976)
Procedures and Responsibilities of Purchasers' Special Counsel in Private Placements of Securities with Institutions

handle is hein.journals/busl31 and id is 1561 raw text is: Procedures and Responsibilities of Purchasers' Special Counsel in Private Placements of Securities with Institutions By HORACE B. B. ROBINSON* PRIVATE PLACEMENTS of securities with institutional investors, such as in- surance companies, pension trusts and state retirement systems, usually in- volve the issuance and sale of notes or bonds with a term of from ten to twenty-five years. Sometimes they are subordinated convertible obligations and, occasionally, they may be issued with accompanying warrants. Some- times equity securities are involved, usually preferred stock. If the transaction is with more than one purchaser, Special Counsel for the purchasers is usually selected by the purchaser acquiring the largest amount of the securities being issued with consultation normally with other purchasers of substantial amounts of the issue or purchasers acquiring at least a majority of such securities. Before accepting an assignment as Special Counsel, it should verify that the representation would not involve it in a conflict of interest. Such a con- flict might exist, for example, if it acts as general counsel for the company issuing the securities (the company) or otherwise has a substantial pro- fessional relationship with the company. Other examples of possible conflict may exist if Special Counsel has a substantial relationship with the company's investment bankers or has represented purchasers of other securities of the issuer which do not rank on a parity with the proposed securities being issued. 1. CONSIDERATION OF OUTLINE OF TERMS AND OF FORMS OF BASIC DOCUMENTS Upon accepting the assignment, Special Counsel's first task is to review the outline of terms of the securities to be issued, which is ordinarily pro- vided by the purchaser. (The word purchaser is usually used in this paper to refer to the purchaser acquiring all or the largest amount of the securities being issued. On some placements there is more than one purchaser who acquires equal or substantial amounts of securities being issued and acts as a lead purchaser. In such cases, the word purchaser will, unless the context otherwise requires, refer to all of the lead purchasers. The word purchasers will refer to the one or more purchasers in the particular financing.) Special Counsel also reviews general and financial information about the * Member of the New York Bar. 1489

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