Adopts narrow construction of confidentiality provisions of partnership agreement and concludes that federal privacy laws do not pre-empt state access law
In November 2008, Parkcentral Global, L.P. a hedge fund organized as a Delaware limited partnership, was liquidated following large losses that "wiped out investors' capital." With no prospects for future investment operations, Parkcentral's "only activity [became to] defend lawsuits against it." One such lawsuit was brought by limited partner Brown Investment Management, L.P., which filed a complaint in the Court of Chancery on February 4, 2010 "seeking an order that Parkcentral provide Brown with the name and address of each partner."
In response to Brown's lawsuit, the Vice Chancellor ordered Parkcentral to produce the list, noting that "Parkcentral had not placed restrictions to limited partners' rights in the Partnership Agreement." At the same time, the Vice Chancellor ordered Brown to preserve the confidentiality of the list and to use the information solely for the purposes set forth in its request letters. Parkcentral appealed this order to the Delaware Supreme Court.
The Court's Analysis
The Court began its analysis by underscoring that the principle of freedom of contract provides parties to a Delaware limited partnership with "broad discretion when drafting their partnership agreement." Although DRULPA õ17-305 entitles limited partners to access partnership information "if they make a reasonable demand for a purpose reasonably related to their interest as a limited partner," this section also "allows the general partner to establish reasonable standards governing the right to access information in the partnership agreement or otherwise" and "to restrict the rights of a limited partner to obtain information ... in the partnership agreement."
Against this backdrop, the Court analyzed the three arguments offered by Parkcentral in support of its refusal to disclose the partner list to Brown:
The Parkcentral decision serves as a reminder that Delaware law gives parties wide latitude in drafting partnership agreements. Particularly in such a sensitive area as the right of limited partners to obtain partnership information for a proper purpose, Delaware courts will be reluctant to enforce supplementary policies which apparently undercut express provisions of the partnership agreement. It is also interesting to note that the Court was not prepared to view the federal privacy regulations as pre-empting the access granted to limited partners by DRULPA.
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 Specifically, regulations adopted under the Gramm-Leach-Bliley Financial Modernization Act of 1999, 15 U.S.C. õ 6801.
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