SEC Charges Former Oppenheimer Private Equity Fund Manager with Misleading Investors about Valuation and Performance (with Lofchie Comment)

The SEC charged a former portfolio manager at Oppenheimer & Co. with misleading investors about the valuation and performance of a fund consisting of other private equity funds. The SEC found that the portfolio manager disseminated quarterly reports and marketing materials to prospective investors, which misstated that the valuation of the Oppenheimer fund's holdings was based on values received from the portfolio managers of those underlying funds. As a result, the fund's reported performance, as measured by its internal rate of return, a key indicator of the fund's performance, was significantly enhanced. These charges follow Oppenheimer's previous agreement to pay $2.8 million in a settlement of related charges.

Lofchie Comment: This is more of a straight fraud claim based on the misrepresentation of investment performance than one based on the manner in which assets were valued.

See: SEC Complaint; SEC Press Release.
See also: SEC Charges New York-Based Private Equity Fund Advisers with Misleading Investors about Valuation and Performance (March 12, 2013); FINRA Fines Broker-Dealer for Penny Stock and Related AML Violations (August 5, 2013).