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SEC hits 13 firms with enforcement actions for failure to file disclosures

  • Form PFs include information about investment strategy, portfolio companies
  • SEC uses forms to collect data, identify enforcement priorities
  • Firms fined $75,000, didn’t admit or deny allegations

The SEC censured 13 private investment firms for failing to file timely disclosures about their investment funds, strategies and portfolio companies.

Each firm agreed to pay a $75,000 penalty without admitting or denying the SEC’s findings.

“These advisers’ repeated reporting failures deprived the SEC of important information they were required by law to provide,” said the co-chief of the SEC Enforcement Division’s Asset Management Unit, Anthony Kelly, in a statement.

“We encourage investment advisers to take a fresh look at whether they are meeting their reporting obligations and adjust their compliance programs accordingly.”

Private fund managers with assets of more than $150 million are required to provide the SEC with annual reports, known as Form PFs, which the regulator uses to identify trends and areas of focus for its enforcement efforts.

The SEC established the rule in 2011 following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, subjecting private equity and hedge funds to greater scrutiny.

In the years since Dodd-Frank, the SEC has taken enforcement actions against firms like Apollo Global Management, Blackstone GroupTPG and others for failing to disclose information to their investors about fees, conflicts of interest or vendor relationships. Apollo, Blackstone and TPG did not admit or deny wrongdoing.

The firms the SEC cited for failing to file timely Form PFs are:

  • Bachrach Asset Management
  • Biglari Capital
  • Brahma Management
  • Bristol Group
  • CAI Managers & Co
  • Cherokee Investment Partners
  • Ecosystem Investment Partners
  • Elm Partners Management
  • HEP Management Corp
  • Prescott General Partners
  • RLJ Equity Partners
  • Rose Park Advisors
  • Veteri Place Corp

Last year, the SEC announced settlements with 10 firms for violating pay-to-play rules, which prohibit executives from making meaningful political contributions to politicians who could influence investment decisions.

Action Item: To read the SEC release detailing the enforcement actions, visit www.sec.gov/news/press-release/2018-100