SEC Eyes Private-Equity Performance Claims

Oct 29 2014 | 1:03pm ET

The Securities and Exchange Commission is casting a skeptical eye over performance claims made by private-equity firms.

The regulator is looking into how firms report their internal rates of return for past funds in marketing materials, Reuters reports. The metric does account for fees paid by investors—but may also include the returns enjoyed by the firm and its general partners, who pay no fees.

That inclusion would inflate the returns. The SEC is investigating whether firms are disclosing enough about how they calculate their IRRs.

Unlike hedge funds, private-equity fees are not standard. Nor, it seems, are practices for calculating IRR: Bain Capital, Blackstone Group and Carlyle Group exclude returns earned by partners, but Apollo Global Management does not. All four firms disclose their method to investors, according to Reuters.


In Depth

Q&A: Portfolio Advisors' Brian Murphy On The Advantages of A Private Markets Platform

Jan 2 2018 | 11:05am ET

Most private markets firms reference their platforms as a source of competitive...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: The Top Hedge Fund Industry Trends for 2018

Jan 2 2018 | 12:22pm ET

Each year, Don Steinbrugge’s Agecroft Partners compiles the insights gained...

 

FINalternatives Trending

From the current issue of