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SEC Ramps Up Scrutiny of Private Equity Firms’ Writedowns

  • Examiners asking questions on fee calculations when bets sour
  • Regulators have looked into whether firms delayed write-offs
A person walks into the headquarters of the U.S. Securities and Exchange Commission in Washington, D.C.

A person walks into the headquarters of the U.S. Securities and Exchange Commission in Washington, D.C.

Photographer: Brendan Hoffman/Bloomberg 

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Buyout firms have been forced to erase billions of dollars from the value of their wagers in the economic downturn, and financial regulators are now scrutinizing whether managers are reducing fees for investors when those deals sour.

The Securities and Exchange Commission has been ramping up inquiries to private equity firms about whether they adjust customer fees when bets get written off to zero or below their original price tags, people with knowledge of the matter said.