Private-Equity Fee Disclosure Audit Record

PROBLEM: On October 7, 2015, the SEC announced three Blackstone private equity fund advisers agreed to pay nearly $39 million to settle charges they failed to disclose accelerated monitoring fees — lump sums of years of future advisory fees collected when portfolio companies were sold or went public, in some cases covering periods after Blackstone no longer owned them — and a legal-fee discount arrangement that favored Blackstone over the funds. The SEC found a breach of fiduciary duty; $26.2 million was disgorged plus $2.6 million interest and a $10 million civil penalty, and $28.8 million went to affected fund investors. Blackstone neither admitted nor denied the findings.

SOLUTION: A private-equity fee disclosure audit record: every monitoring fee, acceleration, and side arrangement logged with the portfolio company, the period covered, and the date investors were told — so fees taken before a sale are visible before the sale, not after.

EVIDENCE BASIS: DOCUMENTED — SEC press release Oct 7, 2015 (2015-235): $39M settlement; $26.2M disgorgement + $2.6M interest + $10M penalty; $28.8M to investors.