Matt Taibbi has written a characteristically informative, incisive piece about the embarrassing spectacle of the SEC’s Director of Compliance Inspections and Examinations, Andrew Bowden, making sycophantic remarks about the private equity industry at a recent conference, a story we broke early last week.
Read more...Last week, we wrote about a damning example of regulatory capture that occurred at a conference at Stanford Law School on March 5. In the Q&A session, the SEC’s head of examinations, Andrew Bowden, threw a big bouquet at an industry he oversees, private equity, repeatedly calling it “the greatest,” praising its returns, and saying that he’s told his son that he’d really do well to get a job in private equity.
Read more...Andrew Bowden “Please give my son a job” scandal spreads, and what you can do.
Read more...Stanford Law School Covers Up SEC’s Andrew Bowden’s Embarrassing Remarks by Deep-Sixing Conference Video
Read more...Why the SEC should demand the resignation of examination chief Andrew Bowden after he fawned over private equity, an industry he oversees.
Read more...The SEC has retreated on its tough talk about widespread misconduct in private equity. A panel at Stanford Law School reveals a possible cause. Andrew Bowden, the head of the exam unit, reveals himself to be deeply, embarrassingly captured.
Read more...We are adding two new private equity limited partnership agreements to our document trove, bringing the total to 23.
Read more...In a couple of weeks, Guitar Center will need to report its Christmas performance to its bondholders. If things do not look good, its bonds will be ripped apart like Radio Shack’s.
Read more...If a lawsuit filed yesterday by TPG is to be taken at face value, the private equity kingpin has been the subject of a nasty extortion attempt by a vengeful now former employee, Adam Levine. Levine allegedly not only threatened to use his PR clout to bring down the firm, but purloined confidential materials from TPG’s systems and doctored at least one before sending it to a reporter at New York Times’ Dealbook. And TPG further claims it had good reason to be worried because Levine asserted that it was his grand jury testimony, shortly after he left the Bush White House as a member of its communications team, that brought down Scooter Libby.
But the real bombshell in the filing is the way that the New York Times’ Dealbook looks to have thrown Levine, an alleged source, under the bus.
Read more...As we’ve been examining private equity abuses, readers have been incredulous that investors have put up with one-sided, deliberately vague, complex, and/or obfuscatory contracts, unreasonable demands for secrecy, and lack of access to critically important information, such as the financial statements of the portfolio companies that they own. This failure of investors to protect their own interest is particularly troubling given that so many are fiduciaries.
We have another example of this sort of conduct that comes out of an important story in the Wall Street Journal yesterday. Private equity kingpin KKR made what amounted to an admission of guilt by rebating fees that the SEC had found were improperly charged, meaning stolen from the limited partners. We’ve obtained the document that was the foundation of the story and are embedding it at the end of this post. It’s a remarkable example of how cronyistic the relationships are between hapless, captured investors and the general partners who led them by the nose.
We are about to do some document forensic work, so put on your gumshoes!
Read more...KKR made what amounted to an admission of guilt to the blistering charges that the SEC laid at the doorstep of the private equity industry last May. Then, Andrew Bowden described in unusually specific detail the widespread, serious abuses it was finding in its initial private equity examinations, including what amounted to embezzlement.
Mark Maremont of the Wall Street Journal, based on a document obtained by FOIA from the Washington State Investment Board, learned that KKR had disgorged some ill-gotten fees.
Read more...Today, the Financial Times has a prominent article on how the giant public pension fund and private equity investing heavyweight CalPERS has a new push on to reduce the fees that it pays to private equity firms.
This would all be salutary, except that a board meeting in December exposed that CalPERS’s staff has an unduly narrow conceptualization of the charges that private equity firms are taking out of the companies that they buy with the funds of limited partners like CalPERS. As a result, this effort demonstrates how badly captured the limited partners like CalPERS are. They passively accept the parameters set by the general partners and ask for concessions only within that framework, rather than demanding entirely new arrangements in light of well-publicized abuses and gaping shortcomings in transparency and accountability.
Read more...Yves here. I’ve read the detailed traffic between the author Eric L. Prentis and the publication in question, Energy Economics, and have also run them and his paper by academics who have or are supervising significant research and publication efforts. They gave the Prentis paper high marks and agreed that the actions of Energy Economics […]
Read more...The Republicans have been quick and shameless in using their control of both houses to try to crank up the financial services pork machine into overtime operation. The Democrats at least try to meter out their give-aways over time.
Their plan, as outlined in an important post by Simon Johnson, is to take apart Dodd Frank by dismantling key parts of it under the rubric of “clarifications” or “improvements” and to focus on technical issues that they believe to be over the general public’s head and therefore unlikely to attract interest, much the less ire. However, as Elizabeth Warren demonstrated in the fight last month over the so-called swaps pushout rule, it is possible to reduce many of these issues to their essential element, which is that Wall Street is getting yet another subsidy or back-door bailout.
Today’s example is HR 37, with the Orwellian label “Promoting Job Creation and Reducing Small Business Burdens Act”.
Read more...Gretchen Morgenson of the New York Times released an important story over the holiday period on how a mid-sized private equity firm, Freeman Spogli, with $4 billion under management, was found to have made serious violations of its investment agreement. The SEC’s fund examination unit stated that Freeman Spogli, in two of its older funds, FS Equity Partners V (“FS V”)and FS Equity Partners VI (“FS VI”), looked to have repeatedly violated of fee-sharing agreements and to have operated as an unregistered broker-dealer. It asked for Freeman Spogli to make full restitution of the failure to reduce management fees and provide evidence that required reimbursements that looked to have been, um, ignored were actually made.
While Morgenson has done a fine job of presenting the facts of the case, we beg to differ with her as to some of the inferences she draws. She sees this case as a real step forward for investors. We see it as showing how loath both investors and the SEC to take serious action even in the face of clear-cut evidence of misconduct.
Read more...