An SEC investigation found the buyout firm had provided misleading information claiming the Global Resource Private Equity Fund I’s (OGR) holdings of other private equity vehicles were valued “based on the underlying managers’ estimated values”.
It said Oppenheimer had actually valued the fund’s largest investment, Cartesian, at a significant markup to the underlying manager’s estimated value, bumping its IRR from 3.8 per cent to 38.3 per cent.
The firm has agreed to pay a $617,579 penalty and return $2.27m to investors without admitting or denying the SEC findings.
Oppenheimer will pay an additional penalty of $132,421 to the state of Massachusetts following a related action taken by the Massachusetts Attorney General.
George Canellos, acting director of the SEC’s Division of Enforcement, said, “Honest disclosure about how investments are valued and how performance is measured is vital to private equity investors.
“This action against Oppenheimer for misleadingly writing up the value of illiquid investments is clear warning that the SEC will not tolerate lax disclosure practices in the marketing of private equity funds.”
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