- September 2012: Vol. 24 No. 8

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When Do You Say NO? — Investors Need a Code of Conduct Among Themselves

by Nori Gerardo Lietz

We have weathered a significant market downturn, and investors have predictable responses. They expect more information; they want more control; they want liquidity; and, in some cases, they want retribution.

These are natural reactions, particularly when significant losses require investment staff to answer to their superiors and even cause them to worry about the impact on their jobs. General partner responses are similarly predictable: How do I deliver bad news? I’m not as bad as the other guys. How do I make my investors happy now? And, most importantly, How do I convince them to invest more capital with me?

At the very time general partners scramble to focus on and salvage troubled investments, their client base seems to have an insatiable need for more GP time and hand-holding.

General partners have often come to me and confidentially asked, “What do I do about this?” Over the years the “this” is a fact pattern that has put them in untenable posi

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