Buyout firms have been forced to erase billions of dollars from the value of their wagers in the economic downturn, and financial regulators are now scrutinizing whether managers are reducing fees for investors when those deals sour.
The Securities and Exchange Commission has been ramping up inquiries to private equity firms about whether they adjust customer fees when bets get written off to zero or below their original price tags, people with knowledge of the matter said.
While these questions have come up sporadically in recent years, regulators are now asking private equity firms about the issue regularly in routine exams and seeking a level of detail that they didn’t before, the people said. The goal is to make sure that private equity firms, which take a cut of the money they manage, aren’t overcharging state pensions, university endowments and other investors.
‘Enforcement 40’ for 2020
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