SEC to Advocate For More Transparent Fee Disclosures from Private Equity Firms
From the Desk of Jim Eccleston at Eccleston Law:
The rules would compel private equity firms to disclose specific expenses that are passed onto clients. Additionally, the rule would provide guidance on how frequently private equity firms are required to provide the disclosures. SEC Chair Gary Gensler has recently criticized the industry’s fees too high and lacking transparency, which harms numerous investors including pension funds. However, private equity lobbyists are mobilizing in preparation for a legal battle as they plan to contend that fees are agreed to by sophisticated parties, according to those familiar with the matter.
According to the SEC, pensions and endowments have invested heavily in private equity seeking higher returns in a period of low interest rates, which has enabled private equity funds to manager more than $4 trillion of assets. Last November, Gensler asked SEC staff to create a plan for promoting transparency into fee structures as well as the performance metrics utilized by private equity fund managers.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
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