SEC Charges Private Equity Fund Adviser with Fee and Expense Disclosure Failures

The Securities and Exchange Commission today charged registered investment adviser Global Infrastructure Management, LLC for failing to properly offset management fees and for making misleading statements about the fees and expenses it charged. Global agreed to pay a $4.5 million penalty to settle the SEC charges and voluntarily has repaid $5.4 million to its affected private fund clients. 

According to the SEC’s order, Global failed to offset certain portfolio company fees against management fees charged to clients, as it was required to do under the offering and governing documents. As a result, clients overpaid millions in additional management fees. The SEC’s order also found that Global provided investors with inconsistent statements about how Global would calculate management fees. In addition, the SEC’s order found that these violations were caused by deficiencies in Global’s compliance program.

"Private equity fund advisers must ensure that investors do not pay more in fees or expenses than they bargained for and are given accurate information about fees and expenses," said Adam S. Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. "Robust compliance programs are critical to help ensure that clients are not misled and receive full and accurate disclosure."  

Global consented to the entry of the SEC’s order finding that the firm violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 and 206(4)-8. Without admitting or denying the SEC’s findings, Global agreed to a cease-and-desist order, and to pay a $4.5 million penalty. 

The SEC’s investigation was conducted by Luke Fitzgerald, and was supervised by Andrew Dean, both of the Enforcement Division’s Asset Management Unit in New York. The examination that led to the investigation was conducted by members of the Division of Examinations Private Funds Unit and New York Regional Office, including Daniel Faigus, Maryellen Maurer, Majid Mahmood, Jennifer Duggins, and Arjuman Sultana.