SEC Continues Enforcement Against PE Funds

The SEC has announced another enforcement action against a PE fund adviser.  Four affiliated fund advisers of Apollo Global Management have agreed to settle an enforcement action for $52.7 million. The charges were misleading fund investors about fees and a loan agreement and failing to supervise a senior partner who charged personal expenses to the funds. The SEC order can be found here.

In announcing the settlement Andrew Ceresney, Director of SEC Enforcement stated: “A common theme in our recent enforcement actions against private equity firms is their failure to properly disclose fees and conflicts of interest to fund investors.”

As I have written previously disclosure for PE firms has become the focus of the SEC. Their does not appear to be any notion that “Big Boys” are not owed the same level of disclosure as the “Mom and Pop” investors. Now is a good time to review all of your offering documents against  your actual activities. While disclosure will cure most issues a conflict of interest review at least annually is also a good idea. Reviews by independent parties are also a good idea.

(C)  2016 Sharon M. Davison –Please share with attribution.

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