SEC Finds Illegal or Bad Fees in 50% of Buyout Firms

U.S. regulators found illegal collections of fees or severe compliance shortfalls in more than half of the private-equity firms it has examined since 2012, a signal the industry could face tougher oversight or sanctions.

“By far, the most common observation our examiners have made when examining private-equity firms has to do with the adviser’s collection of fees and allocation of expenses,” Drew Bowden, director of the SEC’s office of compliance inspections and examinations, said today in a speech at the Private Fund Compliance Forum in New York. “We have identified what we believe are violations of law or material weaknesses in controls over 50 percent of the time.”