SEC Enforcement Director Highlights Increased Focus on Undisclosed Private Equity Fees and Expenses

The private equity industry is squarely within the crosshairs of the SEC of late. The Commission – specifically its Division of Enforcement (Enforcement) and Office of Compliance Inspections and Enforcement (OCIE) – considers the private equity industry a focal point. See “Acting OCIE Director Discusses the Office’s Focus on Private Equity Managers and Emphasizes the Importance of Disclosure by Advisers” (May 28, 2015). In a recent speech, SEC Director of Enforcement Andrew Ceresney discussed Enforcement’s work in the private equity industry, along with its collaboration with OCIE and the Division of Investment Management. He also gave valuable guidance to private equity managers by sharing numerous arguments that have ultimately proven to be unsuccessful in swaying Enforcement staff. Finally, he explained the impact that Enforcement’s actions have had on the private equity industry as a whole. This article highlights the most significant takeaways from Ceresney’s speech. For additional insight from Ceresney, see “SEC Enforcement Director Assures CCOs They Need Not Fear SEC Action Absent Wrongdoing” (Nov. 19, 2015); and our two-part series on Enforcement and OCIE priorities: “Cybersecurity, Fees, Bad Actors and Never-Before Examined Hedge Fund Managers” (Apr. 28, 2016); and “Conflicts of Interest, Valuation, Performance Advertising and CCO Liability” (May 5, 2016).

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