Advisory Contracts and Fees

Last week, at the Securities Enforcement Forum in Washington, DC, senior staff of the SEC’s Division of Enforcement shed light on risks that asset managers and fund boards should be aware of.  Their comments followed a record enforcement year resulting in more than $4 billion in disgorgement and penalties.  Fueled in part by data collection technology, the SEC brought 868 enforcement actions the past fiscal year.  Approximately 20% involved investment advisers or investment companies, the highest percentage in history, including one that found a private equity adviser to be acting as an unregistered broker/dealer, and others that involved alleged insufficient disclosure around accelerated monitoring fees.
Continue Reading SEC Enforcement Staff Touts Year of Firsts and Big Data

Shortly after my post on the SEC’s recent settlement with Apollo Global Management went up, the SEC released a settlement with another private equity fund manager: W.L. Ross & Co. LLC (“WLR”). Like the Apollo case, the SEC sanctioned WLR for failing to fully disclose how it was collecting its fees. But WLR paid a lower penalty than Apollo, perhaps due to its greater perceived cooperation with the SEC.
Continue Reading More Sanctions from Private Equity Fees: W.L. Ross

Four affiliates of Apollo Global Management settled with the SEC by paying $52.7 million (disgorgement of $37.5 million, prejudgment interest of $2.7 million, and a civil money penalty of $12.5 million) and were issued a cease-and-desist order. There were several bases of alleged misconduct.
Continue Reading Apollo Global Management Settles with the SEC