The US Securities and Exchange Commission will boost its focus on transparency around fees and expenses going into 2018 as the agency takes a step back from rulemaking, its chairman Jay Clayton has said.
The change in approach is part of a “commitment to increase transparency and accountability”, Clayton told delegates at the PLI 49th Annual Institute on Securities Regulation, according to a statement on the SEC’s website.
The speech was published along with the agency’s Division of Enforcement Annual Report for the 2017 fiscal year, which reasserted the SEC’s commitment to tackling fees and expenses transparency.
The report does not break down the enforcement actions by asset class, but does show that the total number filed in fiscal year 2017 fell 13 percent to 754 compared with a year earlier. This was attributed to the conclusion of a voluntary self-reporting program affecting the sellers of municipal bonds.
That the SEC will focus further on fees and expenses is unlikely to be a surprise to private fund managers. Around 80 percent of the issues raised by SEC examiners when visiting a firm relate to this issue, according to one lawyer.
One of the most recent actions taken was against Platinum Equity Advisors, which was fined $3.4 million in September, for allegedly charging three of its private equity fund clients broken-deal expenses that should have been paid by co-investors.
One case against a private equity firm appears in the annual report’s list of noteworthy actions. It related to Shaohua (Michael) Yin, a partner at Hong Kong-based Summitview Capital Management, who allegedly amassed more than $29 million in illegal profits by insider trading in advance of the April 2016 acquisition of DreamWorks Animation SKG Inc. by Comcast Corp.