Private Equity

Private equity refers to the non-public ownership of equity. As such the organization is not listed on a stock exchange and is not regulated like public mutual funds.

Private Equity Funds are usually open to institution funds (i.e. public and private pension funds) as well as high net-worth individuals who can afford a large buy in cost, and can be quite risky placing large sums of money to buy out companies (such as the Chrysler Group) and then either turn them around. Accurate return data must be provided to investors and prospective investors per existing law (i.e. pre Dodd Frank), but it can be difficult for the general public to determine the return of a private equity fund because they do not have to provide public reports. The Dodd-Frank Act alleges that reporting that was already happening to investors will become more standardized, but in fact, all Dodd-Frank will do is raise compliance costs for funds. Some investors have made as much as 30% per year.