Oppenheimer Fund in Valuation Inquiry

Federal regulators are investigating whether a private equity fund that was part of Oppenheimer Holdings Inc. overstated the value of one of its holdings, the Wall Street Journal wrote Friday. The case involves Oppenheimer Global Resource Private Equity Fund LP, which makes investments of its own and invests in other private equity funds, Reuters wrote.

(Reuters) – Federal regulators are probing whether a private equity fund that was part of Oppenheimer Holdings Inc overstated the value of one of its holdings, the Wall Street Journal said, citing people close to the matter.

The case involves Oppenheimer Global Resource Private Equity Fund LP, which makes investments of its own and invests in other private equity funds, the Journal said.

The fund’s overestimation grew to more than $4 million, the WSJ said, citing documents shared with Oppenheimer investors.

The bulk of the mark-up came as the fund was reaching out to potential investors in late 2009, and helped push the fund’s reported internal rate of return to 38 percent, after fees, from a loss of 6.3 percent, according to the Journal.

The fund subsequently raised more than $55 million from individuals and various institutions. The fund and related assets were spun off by Oppenheimer Holdings this year, the paper said.

U.S. Securities and Exchange Commission (SEC) and Massachusetts attorney general have been investigating the Oppenheimer fund since late last year, the paper said, citing people close to the matter.

A spokesman for Oppenheimer told the Journal that the company initiated its own investigation upon learning of the allegations in June 2011.

“The investigation, which included numerous interviews of Oppenheimer employees and the independent auditors for the fund, concluded that the valuation increase was within U.S. accounting standards and the allegations were without merit,” the spokesman told the paper.

The company could not immediately be reached for comment by Reuters outside regular U.S. business hours.