Last week, the staff of the SEC’s Office of Compliance Inspections and Examinations (OCIE) recently released its sixth annual examination priorities announcement. The alert lays out general issues industry can expect OCIE to focus on during the administration of the agency’s examination program in 2018. While reflecting a renewed emphasis
Anthony M. Drenzek
SEC Staff Announces 2017 OCIE Examination Priorities
On January 12, 2017, the staff of the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) released its annual announcement on examination priorities in the coming calendar year. The 2017 examination priorities are organized around three thematic areas: (i) examining matters of importance to…
SEC Announces Settlement with Adviser Found to Have Acted as an Unregistered Broker and Engaged in Conflicted Transactions
On June 1, 2016, the U.S. Securities and Exchange Commission announced a $3.12M settlement with Maryland-based registered investment adviser, Blackstreet Capital Management, LLC, and its managing member and principal owner, Murry N. Gunty. The SEC’s finding that Blackstreet acted as an unregistered broker-dealer in portfolio company transactions highlights the regulatory…
SEC Increases Focus on Private Equity Enforcement
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.
SEC Charges Private Equity Firm and Four Executives with Failing to Disclose Conflicts of Interest
On November 3, 2015, the Securities and Exchange Commission (SEC) announced that it had reached a settlement with Fenway Partners, LLC, a New York-based private equity firm, and several of the firm’s executives (the Respondents) in connection with a failure to disclose conflicts of interests to investors with respect to payments made by portfolio companies of a private equity fund to certain affiliates and former employees of the firm. In settlement of the matter, the Respondents agreed to collectively disgorge approximately $8.7 million, and pay an approximately $1.5 million civil monetary fine.