Bogus Private-Equity Fees Said Found at 200 Firms

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April 7 (Bloomberg) -- A majority of private-equity firms inflate fees and expenses charged to companies in which they hold stakes, according to an internal review by the U.S. Securities and Exchange Commission, raising the prospect of a wave of sanctions by the agency. Cristina Alesci reports on Bloomberg Television's “In The Loop.” (Source: Bloomberg)


Cristina alesci has been following this story closely and joins us with details.

This is interesting, maybe not surprising but interesting.

Private equity would be overcharging.

You are right.

As a result.

Frank legislation in 2012 -- as a result of.

F dodd frank in 2012. the sec one out and required smaller firms to register with them.

It was dubbed a get to know you phase, making some firms uncomfortable.

In this phase, they are getting into the weeds of the business.

Out of 400 firms, over 50% were not charging the right level of fees or disclosing how they were charging these fees.

Private equity firms charge two party fees.

Investor fees and fees of portfolio companies, their holdings.

For what?

For advising the company, for restructuring it.

Like a banker would charge.

A little different.


It does seem we are.

You are buying the company, why are you charging the money?

Just another way of extracting value from the company.

They found they improperly charged the portfolio company for fees and sometimes did not disclose it to investors.

How long have they been able to get away with this echo it has been a longtime.

The reason there has not been additional scrutiny in the past is because private equity is making so much money for investors.

Investors really did not care how they did business.

They got the check at the end of the day.

Investors are becoming more keen on expenses and you have these kinds of injuries.

It is always amazing when the tide goes out, what gets

This text has been automatically generated. It may not be 100% accurate.


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