Doug Cornelius on compliance for private equity real estate
The Securities and Exchange Commission issued a proposed rule and form amendments that would give public companies the option of filing semiannual reports instead of quarterly reports to meet their reporting obligations under the federal securities laws. For those in the private space, that generates a yawn. Private companies are likely to keep reporting quarterly…
The Institutional Limited Partners Association released updates to its ILPA Reporting Template and a new ILPA Performance Template. The goal is to enhance standardization, transparency and comparability in reporting across geographies for private funds. ILPA hosted a webinar discussing the templates and these are my notes. ILPA is setting a January 1, 2026 date as…
The SEC charged EIA All Weather Alpha Fund and its investment adviser, Andrew Middlebrooks, for fraud last year. The SEC alleged that Middlebrooks misrepresented the Fund’s performance in order to retain current investors and to induce new investors. The Adviser directed the creation of and approved an inflated NAV for the Fund with false and…
Angel Oak Capital Advisers sponsored a fund to securitize “Fix and Flip” loans. These loans were targeted at borrowers for the purpose of purchasing, renovating, and selling residential properties. It looks like Angel Oak didn’t get the underwriting correct. Angel Oak saw an unexpected increase in late mortgage payments delinquencies. The securitization had a covenant…
The Securities and Exchange Commission charged PricewaterhouseCoopers LLP and one of its partners with violating auditor independence rules for running a project to upgrade the client’s GRC software while also doing its audit work. Using the “one” in the title is deceiving. This is the third auditor independence case that the Securities and Exchange Commission…
Steven Burrill was using his venture capital fund as a persona piggy bank and the fund’s auditor failed to do anything when it saw the red flags. Now the auditor partner is subject to charges by the Securities and Exchange Commission. Private funds typically take management fees in advance. That is not unusual or illegal….
The Securities and Exchange Commission announced its first enforcement actions for auditor independence failures. I expect your auditors may have a bunch of new restrictions and questionnaires when it is time for the annual audit. The SEC announced two separate enforcement actions, both involving Ernst & Young. In one case, Gregory S. Bednar got too cozy with…
It is not uncommon for fund managers and investment advisers to take management fees payable in advance. At some point, taking fees in advance is just stealing from investors. Steven Burrill and his firm reached that point and went well beyond it. To be clear, taking management fees in advance is not illegal. In fact,…
Investors look for transparency in fees. The Institutional Limited Partners Association published a Fee Reporting Template Last Week to encourage uniformity in the fee disclosures being made to private fund investors. The aim of this proposed template is to encourage increased uniformity in the fee disclosures the fund managers provide to limited partners in private…
“Audit firms must be held responsible when systemic failures such as inadequate engagement procedures, staffing, or supervision cause the firms’ work to fall significantly short of expected standards, particularly when multiple audits and engagements are involved.” – Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. The SEC recently brought separate cases against senior…