Wilbur Ross’s Firm to Pay $2.3 Million SEC Fine on Investor Fees

  • Private equity firm is latest penalized over fee disclosures
  • Wall Street cop has made policing investor costs a priority

Wilbur Ross’s WL Ross & Co. will pay $2.3 million to settle claims that it failed to properly disclose management fees, becoming the latest firm sanctioned in a U.S. Securities and Exchange Commission probe into whether the historically secretive private-equity industry put its own interests ahead of investors.

WL Ross & Co. received about $10.4 million in additional management fees from 2001 to 2011 by using ambiguous language in partnership agreements, the SEC said in a statement Wednesday. The New York-based firm, which didn’t admit or deny the agency’s findings, also agreed to pay $11.9 million in reimbursements, the SEC said.

Wall Street’s top regulator has fined some of private equity’s biggest names over fee disclosures, including Apollo Global Management LLC on Tuesday. The agency has focused how firms charge investors for transaction costs including when deals fall apart and those tied to sales or initial public offerings.

WL Ross failed to adequately disclose that certain transaction costs were charged to investor funds, which led to the higher management fees. The firm self-reported the issue to SEC exam staff and also took remedial action, which the agency acknowledged in the accord.

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