SEC Sanctions Adviser for Overcharging Management Fees

The SEC sanctioned a private equity fund adviser for overcharging management fees to a fund that it managed.

As described in the Order, the fund's governing documents required that the adviser's management fees be reduced following certain triggering events, including a write down of portfolio securities. The SEC stated that the adviser did not account for certain write downs when calculating its management fee, thereby violating Sections 206(2) and 206(4) of the Advisers Act and IAA Rule 206(4)-8 thereunder. As a result, the SEC determined that the company overcharged the fund by more than $900,000.

To settle the matter, the adviser agreed to (i) pay disgorgement and pre-judgment interest totaling $1,020,642.02 to the affected investors, (ii) be censured, and (iii) cease and desist from future violations.

Premium Content

Available only to Premium subscribers.

 

Tags