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Los Angeles, CA

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A clawback refers to an action whereby an employer/benefactor takes back money that has already been disbursed. Several proposed and enacted federal laws provide for clawbacks of executive compensation based on fraud or accounting errors. Companies often write clawback provisions into employee contracts so that, for example, they can take back bonuses that have already been paid out. 

 

In private equity, it refers to the limited partners' right to reclaim part of the general partners' carried interest, in cases where subsequent losses mean that the general partners received excess compensation. 

Clawback