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Private-Equity Scrutiny Deepens as SEC Finds Illegal Fees

Private-equity firms, after decades of operating with limited regulatory scrutiny, are facing possible sanctions and tighter oversight after the Securities and Exchange Commission uncovered improprieties at most firms.

The SEC found illegal fees or severe compliance shortfalls in more than half of the firms it examined since starting a review of the $3.5 trillion industry two years ago, Drew Bowden, head of the SEC’s exam program, said in a speech yesterday. Bowden’s remarks foreshadow significant changes in how the industry operates, said Jay Gould, head of the investment-funds team at law firm Pillsbury Winthrop Shaw Pittman LLP in San Francisco.