Yesterday, SEC Director of Enforcement Andrew Ceresney gave a keynote address on Private Equity Enforcement.  In his remarks, Ceresney reiterated the SEC’s view that private equity is and will be a key enforcement area, and detailed recent actions showing the Commission’s particular focus on undisclosed fees and expenses and on increasing transparency in the industry.  Ceresney also provided guidance on arguments that the SEC staff has typically found unavailing.

Ceresney noted that the unique nature of private equity investments were a concern, asserting that the “investment structure of private equity and the nature of private equity investments can lend themselves to some of the misconduct that we’ve observed.” However, recent enforcement actions show that problems typically arise when fee and expense allocations are not appropriately managed, giving rise to undisclosed conflicts of interest.  Ceresney further stated that as fiduciaries, private equity advisers are expected to eliminate or disclose such conflicts.