SECOn November 3, 2015, the Securities and Exchange Commission (SEC) announced that it had reached a settlement with Fenway Partners, LLC, a New York-based private equity firm, and several of the firm’s executives (the Respondents) in connection with a failure to disclose conflicts of interests to investors with respect to payments made by portfolio companies of a private equity fund to certain affiliates and former employees of the firm. In settlement of the matter, the respondents agreed to collectively disgorge approximately $8.7 million, and pay an approximately $1.5 million civil monetary fine.

This demonstrates that the SEC staff remains focused on related party transaction and compensation arrangements between and among an adviser’s affiliated entities which have the potential to result in actual or apparent conflicts of interest. Private fund advisers should specifically review disclosures concerning any consulting, management, monitoring or other services agreements between the adviser (and/or its affiliates) and fund portfolio companies to ensure that adequate disclosure of the relationships and any related compensation arrangements have been made to fund investors.

Read the full post on our Corporate Defense and Disputes Blog.