“I tell my son, I have a teenaged son, I tell him, ‘Cole, you want to be in private equity. That’s where to go, that’s a great business, that’s a really good business. That’ll be good for you.'” – Andrew Bowden
Mr. Bowden, Director of the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations, was speaking at Emerging Regulatory Issues in Private Equity, Venture Capital, & Capital Formation in Silicon Valley, hosted by Stanford Law School.
His quote was in the context of the financial services industry complaining about too much regulation. His comment led some to question the SEC’s coziness with the industry.
I still remember Bowden’s speech delivered at the 2014 PEI Private Fund Compliance Forum. He figuratively threw a grenade in the room by saying his team found violations of law or material weaknesses in over 50% of the exams of private equity firms when it came to fees and expenses.
I don’t see his speech as industry capture. I see it as telling private equity to quit complaining and get your house in order. Private equity is good for investors and good for managers. Don’t screw up.
It’s the job of compliance to keep the good thing going and not let the firm screw up.
Sources:
- SEC’s Bowden: PE greatest business to be in in Private Funds Management
- The SEC’s Andrew Bowden: A Regulator for Sale? by Yves Smith in naked capitalism
- Emerging Regulatory Issues in Private Equity, Venture Capital, and Capital Formation in Silicon Valley
- View from the SEC
Image of Andrew Bowden is by the Securities and Exchange Commission (on Flickr!?!)
I agree with your take on Bowden’s comments.
Thanks. Having listened to Bowden talk about private equity he clearly likes the link between long term compensation and long term returns to investors. He is also keenly aware of the conflicts in the industry and the need for the SEC to be vigilant. PE managers returned millions of dollars back to investors for fees that were improperly charged because of Bowden.