Eighteen months ago, Andrew Bowden gave his Sunshine speech on the SEC’s disapproval of private equity fee compliance. Now, enforcement cases are being finalized on private equity fees. The SEC is just now finishing a focus on real estate funds. Should we be looking for real estate fund enforcement cases on the horizon?
While listening to one of the panels at the Coping with Regulatory Change conference this week, a representative of the SEC mentioned that the SEC had been working on a exam focus of real estate funds. You may remember that Marc Wyatt mentioned this exam focus in a speech this spring at PEI’s Private Fund Compliance Forum.
Bowden’s speech set the stage for the fee and expense enforcement actions that are coming out. See Blackstone, Cherokee, Fenway for examples. It seems reasonable for there to be an 18 month window to examine, investigate, enforce, and settle the cases that SEC deems worthy.
The SEC has conducted a focus on real estate funds.
I would hope that all of the real estate fund managers have read the stories on Compliance Building over the last six years and made the compliant and ethical choices for their firms. If so, hopefully they came out of the exams with either clean exams or merely minor comments.
However, I fear that the SEC found real estate fund managers that were not being compliant and that were not acting ethically. That would mean that enforcement cases are in the pipeline.
When I asked that SEC representative whether there were enforcement cases in the pipeline against real estate fund managers. He or she gave the correct answer of “No comment.”
I leave it to you to interpret that response.
I think I see something on the horizon.
Image: Boston Skyline – Pink Panoramic by Noah B. Kaplan
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