Category Archives: Private equity

SEC Investigating Group Purchasing Kickbacks by Private Equity Firms

You have to hand it to the private equity firm kingpins: they are skilled at financial sleight-of-hand which makes their already-lucrative investments even more attractive to them. But as the SEC has been exposing, too many of these tricks come at the expense of their investors.

The Wall Street Journal exposes the latest ruse tonight. While the dollar amounts aren’t earthshaking, the behavior is particularly shameless, and involves some of the biggest firms in the industry: KKR, Blackstone, and TPG. It shows that these firms are unafraid of engaging in out-and-out skimming as long as they dress it up in a way that is hard to ferret out.

Wolf Richter: How Private Equity Firms Manipulate the Buy-to-Rent Housing Racket

Private equity firms are the ultimate smart money on Wall Street; they know how to wring out the last dime from their own clients, such as pension funds and rich individuals, through hidden fees, obscure expenses, elaborate expense shifting, lackadaisical disclosure, and “zombie advisers,” to the point where SEC Inspection Chief Andrew Bowden singled them out in a speech in May. Now the lawyers are circling.

And these private equity firms invented a whole new business: buying vacant homes out of foreclosure and from banks and renting them out. But how do they exit at a profit?

How Private Equity Investors Signed Up for Tax Trouble

How did supposedly sophisticated investors sign up for investments that have tax liability bombs in them? The seemingly arcane but actually important tax problem of UBTI, or “unrelated business taxable income,” illustrates how utterly outmatched private equity limited partners are by the general partners and their top-tier hired guns.

How Oligopolies Undermined Competitiveness and Produced Inequality

The role of lax antitrust enforcement and the resulting rise in oligopolies is sorely neglected in most analyses of the rise of inequality and America’s flagging competitiveness.

The Role of Finance in Detroit’s Bankruptcy and State/Local Budget Woes

Rob Johnson, political insider and executive director of INET, discusses the role of Big Finance in state and local budget woes.

North Carolina Treasurer, Accused of Malfeasance , Defends Secrecy of Private Equity Investments

The Treasurer of North Carolina has reacted to pending legislation designed to shed more light on the murky world of private equity investments by having allies sponsor their own “transparency” bill that is a big step backwards.

A Loss in San Francisco

Readers may recall that we were exercised last week about a motion that CalPERS’ attorney had sent to us in advance of his plan to file it.

ND Ethics Law Potentially Broken on Petraeus Fracking Trip for Private Equity Kingpin KKR

Steve Horn of DeSmogBlog has done important original reporting and uncovered what could be impermissible dealings between North Dakota officials and David Petraeus, in his role as emissary for one of private equity’s best-known players, KKR.

More on CalPERS’ Sloppy Private Equity Records and Its Aggressive Stonewalling

What is CalPERS trying to hide? The pension fund sweetly professes that we should have the data we’ve asked for, but won’t provide it. It’s latest move shows how deeply it is committed to scorched-earth strategies in dealing with us.

Private Equity Limited Partners Don’t Get Independent Valuations of Fund Investments

It is perversely considered to be normal to allow private equity general partners to value fund assets on a “trust me” basis. And the limited partners are also awfully trusting in allowing for very thin explanations of distributions (payments) from the funds.

Debunking the Myth of Private Equity’s Superior Returns

Why private equity returns are nowhere near as juicy as most investors in private equity believe.

The KKR Capstone Scam: A Picture Worth 10,000 Words

A revealing image, and more investigation of KKR’s all-too-clever wordsmithing strongly indicate its claim that KKR Capstone is not an affiliate does not stand up to scrutiny. This is a serious charge because if the critics are right, KKR is embezzling.

Private Equity Says “Nothing to See Here” on Secret Document Release, So Why Not See Them All?

In response to media inquiries, private equity firms have reversed themselves on their position that revealing limited partnership agreements would hurt them. So there should be no objection to passing legislation in every state to make these agreements subject to disclosure.

The Surprising Information that Private Equity Limited Partners Don’t Get

Private equity firms invest in companies, yet the limited partners in the overwhelming majority of funds can’t see their financial statements. And there’s good reason to be concerned.