30M for years of wrongly charging investors
Henry Kravis has a fee problem.
Kravis’ private equity powerhouse KKR Co. on Monday agreed to pay $30 million to settle allegations it passed on to outside investors fees that its partners should have been charged.
It resulted in Kravis and his fellow insiders paying nothing in “broken canada goose outlet deal” fees. The insiders sidestepped more than $17 million in fees, the SEC said.
KKR’s outside investors were kept in the dark about the practice, the SEC alleged.
It is the first time a major PE firm has been charged with misallocating fees.
The case comes at a time when both the SEC and PE investors are paying closer canada goose attention to fees.
As part of the settlement, canada goose outlet in usa KKR did not admit or deny any https://www.fanclub-fulton-smith.de wrongdoing.
“Before 2011, KKR had not considered whether to allocate or attribute broken deal expenses to KKR Co Investors because in its view the flagship PE Funds bore all canada goose outlet new york city broken deal expenses,” the canada goose outlet parka SEC said in its order.
Broken deals were instances in which KKR attempted canadian goose jacket to buy a canada goose coats on sale company canada goose outlet reviews but failed.
“This resolution, which relates to historical Canada Goose Online expense allocation disclosures and policies and not to any current practices, allows us to focus on delivering value for those who invest with us,” KKR said in a statement.
While the settlement is small compared to the billions of dollars KKR has raised, it is not the first time the Kravis firm has been found to have pushed the envelope on fees and in each case KKR executives got richer.
Last year, KKR was exposed for allegedly keeping fees that KKR Capstone, its consulting arm, collected canada goose outlet black friday from KKR canada goose jacket outlet portfolio companies.
The fees, paid by the uk canada goose outlet companies for getting canada goose outlet discounts on group purchases of such items as buy canada goose jacket cheap office supplies, should have been shared with outside investors.
KKR insiders kept all the fees. Kravis and other owners shared the fees only after media reports highlighted the practice.
KKR, as of March canada goose clearance 31, had invested $4.5 billion 52 percent of the $8.7 billion flagship private equity fund it raised in 2012, so the firm will likely launch a new buyout fund in the next year or two.
Besides allegedly over charging its own investors, Kravis canada goose outlet uk sale last year along with six other PE co defendants settled a civil federal case brought by shareholders who alleged that they were cheated out of profits cheap canada goose canada goose uk shop because the PE firms colluded when buying the companies they owned stock in.
The alleged collusion kept the price of the takeovers artificially low, it was alleged.
KKR settled after much of the case had survived summary judgment and was headed to a jury trial.
Sarah Bartlett, in her 1991 book, “The Money Machine: How canada goose outlet sale KKR Manufactured Power and Profits,” alleged that Kravis charged excessive fees.
KKR responded: “We take our fiduciary responsibilities seriously and have strived to adapt our policies and practices to the changing nature of goose outlet canada the industry, market canada goose outlet nyc and our business.”.