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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, May 23, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will instruct counsel for private equity (PE) fund managers on the disclosure issues and conflicts of interest associated with fund fees and expense allocations. The panel will discuss recent SEC actions and guidance, and best practices in administration and reporting that will pass muster with investors and the SEC.

Faculty

Nicole Krea
Partner
Ropes & Gray

Ms. Krea is a partner in the corporate department and asset management group. Nicole focuses her practice on private investment funds, and routinely advises fund sponsor clients regarding various fundraising, regulatory and compliance matters. She also represents institutional investors and funds of funds in connection with their investments in private funds and in co-investments. 

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Jaclyn Grodin
Counsel
Goulston & Storrs LLP

Ms. Grodin represents companies, private equity firms, hedge funds, investment advisers, real estate entities, and individuals in a wide range of business disputes including partnership and investor actions, financial fraud cases, securities-related matters, government investigations, trade secret litigations, and intellectual property controversies. Prior to joining the firm, Ms. Grodin spent more than three years as an Assistant Attorney General in the Investor Protection Bureau of the New York State Office of the Attorney General, where she worked on numerous high-profile investigations, including for violations of New York’s Martin Act by investment advisers, asset managers, and broker-dealers as well as law enforcement’s violation of state and federal constitutional rights.

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Adam S. Aderton
Partner
Willkie Farr & Gallagher, LLP

Mr. Aderton’s practice focuses on regulatory enforcement matters and white collar defense. He has particular experience in regulatory inquiries and litigation involving the asset management industry, including matters involving private equity funds, hedge funds, venture capital funds, mutual funds, ETFs, business development companies, and separately managed accounts. In addition to representing clients in connection with SEC and other government examinations, investigations, and litigations, Mr. Aderton provides compliance counseling to asset managers.

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Description

SEC findings from examinations of registered PE advisers reveal that the most common deficiencies relate to fees and expenses charged by managers of portfolio companies. Specific deficiencies include payments to consultants, shifting expenses during the fund's life, allocation of expenses, and hidden fees.

The SEC continues to focus on fees, expenses, and conflicts of interest inherent in the PE manager role and has collected significant penalties from fund managers who fail to properly disclose fees, expenses, and conflicts of interest to their investors. These SEC actions provide guidance to fund managers and their counsel regarding practices to avoid and best practices for full disclosure.

In reviewing current or prospective fund investments, counsel to investors can use these enforcement actions as a roadmap for questioning fund managers about fee and expense allocations. Funds that do not satisfy investor questions or concerns face the risk of SEC enforcement activity and potential investor litigation.

Listen as our authoritative panel of regulatory attorneys reviews fund fee and expense allocation deficiencies and the specific practices which have been identified as problematic. The panel will discuss best practices for reporting fees and expenses and due diligence for investors evaluating current and prospective investments.

Outline

  1. Overview of SEC oversight and authority concerning PE funds
  2. Notable SEC enforcement actions on undisclosed fees and expenses
    • Payments to consultants
    • Shifting expenses during fund's life
    • Characterization of expenses
    • Hidden fees
  3. Investor due diligence
  4. Best practices in formulating and disclosing PE management fees and expenses

Benefits

The panel will review these and other key issues:

  • What are the stated priorities of the SEC in examining fund managers' fees and expenses?
  • What particular fee and expense practices has the SEC identified as deficient with respect to disclosure to investors?
  • What due diligence steps should investors take in light of the SEC audit findings?
  • What steps should funds take to review fee and expense practices to ensure investor confidence?