Private Equity Management Fees and Expenses: Avoiding Investor Claims and SEC Enforcement Actions

Description

The SEC’s findings from examinations of registered PE advisers revealed that the most common deficiencies were related to fees and expenses charged by managers of portfolio companies. Specific deficiencies included payments to consultants, shifting expenses during the fund’s life, allocation of expenses and hidden fees.

The SEC continues to focus on fees, expenses and conflicts of interest inherent in the PE manager role and has collected significant penalties from fund managers who fail to properly disclose fees, expenses and conflicts of interest to their investors. These SEC actions provide guidance to fund managers and their counsel regarding practices to avoid, and best practices for full disclosure.

In reviewing current or prospective fund investments, counsel to investors can use these enforcement actions as a road map for questioning fund managers about fee and expense allocations. Funds that do not satisfy investor questions or concerns face the risk of SEC enforcement activity and potential investor litigation.

Listen as our authoritative panel of regulatory attorneys reviews fund fee and expense allocation deficiencies and the specific practices which have been identified as problematic. The panel will discuss best practices for reporting fees and expenses and due diligence for investors evaluating current and prospective investments.