{"id":5271,"date":"2012-02-15T00:00:00","date_gmt":"2012-02-15T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/02\/sec_examines_the_private_equit"},"modified":"2022-04-22T10:59:50","modified_gmt":"2022-04-22T15:59:50","slug":"sec-examines-the-private-equit","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-examines-the-private-equit\/","title":{"rendered":"SEC Examines the Private Equity Industry"},"content":{"rendered":"<p>The Securities and Exchange Commission has started to take a broad look at the private equity industry, which until now hasn\u2019t been subjected to much regulatory scrutiny. The industry consists of several thousand firms with over $1 trillion in assets under management. Now, the federal agency wants to know more about these financial firms\u2019 business practices.<\/p>\n<p>According to the New York Times, the Commission\u2019s enforcement unit has sent a letter to a number of private equity funds as part of its informal look. The SEC, however, has been quick to stress that none of the firms are suspected of any wrongdoing and that it merely wants more information to be able to look into possible securities law violations. For example, the Commission wants to examine whether some private equity funds are overstating their portfolios\u2019 value to bring in investors for future funds. Regulators also want to know about the ways in which private equity companies value investments and report performance.<\/p>\n<p>The SEC\u2019s inquiry is being conducted by its Asset Management enforcement division, which has been taking more aggressive actions to eliminate misconduct in the financial industry. At a private equity conference last month, the division\u2019s co-chief Robert B. Kaplan talked about the need for more oversight over the industry.<\/p>\n<p>Bloomberg.com reports that according to a person that knows about the inquiry, so far, it is the smaller private equity companies that are being scrutinized while some of the largest companies, including privately trading ones, are, for now, being overlooked. For example, Blackstone Group LLP, which is the largest private equity company, didn\u2019t receive the letter the SEC sent out in December. KKR &amp; Co. also didn\u2019t get the letter.<\/p>\n<p>The SEC decided to take a closer look at the private equity industry after the financial crisis and firms having to mark down holdings. Since then, those demanding better regulation from the agency have called for more oversight. While the SEC is tasked with policing public securities offerings and transactions it typically hasn\u2019t looked at areas involving private placements that don\u2019t have to register with it and sophisticated investors. That said, the Commission has still been allowed to enforce the fiduciary duties of private equity managers to the funds.<\/p>\n<p>Now, per the Dodd-Frank Wall Street Reform and Consumer Protection Act, the majority of private equity companies will need to register with the SEC by the end of next month. Some 750 advisers will have to disclose \u201ccensus-like\u201d information about employees, investors, assets under management, activities beyond fund advising, and possible conflicts of interest.<\/p>\n<p><a href=\"https:\/\/dealbook.nytimes.com\/2012\/02\/12\/private-equity-industry-attracts-s-e-c-scrutiny\/\">Private Equity Industry Attracts S.E.C. Scrutiny<\/a>, New York Times, February 12, 2012<\/p>\n<p><a href=\"https:\/\/www.bloomberg.com\/news\/2012-02-13\/sec-said-to-look-at-smaller-firms-in-review-of-private-equity-valuations\">SEC Review of Private Equity Said to Focus on Smaller Firms<\/a>, Bloomberg, February 13, 2012<\/p>\n<p> <a href=\"https:\/\/www.investorlawyers.com\/blog\/sec-examines-the-private-equit\/#more-5271\" class=\"more-link\">Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Securities and Exchange Commission has started to take a broad look at the private equity industry, which until now hasn\u2019t been subjected to much regulatory scrutiny. The industry consists of several thousand firms with over $1 trillion in assets under management. Now, the federal agency wants to know more about these financial firms\u2019 business [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3928],"tags":[],"class_list":["post-5271","post","type-post","status-publish","format-standard","hentry","category-private-equity"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>SEC Examines the Private Equity Industry &#8212; Investor Lawyers Blog &#8212; February 15, 2012<\/title>\n<meta name=\"description\" content=\"The Securities and Exchange Commission has started to take a broad look at the private equity industry, which until now hasn\u2019t been subjected to much &#8212; February 15, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/sec-examines-the-private-equit\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"SEC Examines the Private Equity Industry &#8212; 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