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SEC launches investigation into fund fee disclosures

1 May 2014

dcThe US Securities and Exchange Commission (SEC) is looking into whether private equity fund advisers are collecting illegal fees.

The SEC is reviewing the collection of fees and expenses in violation of offering documents, the agency’s enforcement director Andrew Ceresney told Reuters.

Over the past two years, inspections of private equity and hedge fund managers identified various problems that are now being investigated by the agency.

These problems included misallocating fees and expenses, charging improper fees, disclosing fee monitoring inadequately and using bogus service providers to charge false to kick back part of the fee to the adviser, SEC chairman Mary Jo White told the US House of Representatives earlier this week.

Earlier this year the SEC appointed a team to examine private equity and hedge funds following the 2010 Dodd-Frank law.

These examiners will look at areas including how private equity and hedge funds value their assets, according to a Reuters report, which noted that the regulator has been criticised for missing violations such as the Ponzi scheme at Bernard Madoff’s asset management arm.

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