Seeking Alpha

SEC review takes issue with P-E fees and expenses

  • The private-equity industry largely escaped regulatory scrutiny prior to the financial crisis, but no more after Dodd-Frank mandated greater oversight of asset managers. According to a Bloomberg, an SEC review finds more than half of P-E firms inflate fees and expenses charged to portfolio companies, raising the prospect of a wave of sanctions from the agency.
  • Last month, the SEC filed a case against Clean Energy Capital and founder Scott Brittenham, accusing them of misusing more than $3M in funds. The money, says the SEC, should have gone to investors. Clean Energy denies the accusation.
  • “The industry is going to be forced into change because, frankly, when your big investors are public plans and other money that’s run by fiduciaries, you can’t afford as a business matter to be deemed to be engaging in fraud,” says attorney Barry Barbash. “Fraud doesn’t sell very well.”
  • ETFs: PSP, PEX
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Comments (1)
  • Hendershott
    , contributor
    Comments (1602) | Send Message
     
    Inflated fees and expenses on top of dividends paid to PE owners with borrowed money. What a surprise.
    7 Apr 2014, 11:02 PM Reply Like
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