The Financial Times weighed in today with a long, well-researched piece, Private equity: A fee too far, on an issue we’ve discussed for some time, that of private equity firm oh-too-cleverness and too often, outright pilfering, in its dealings with investors, who include public pension funds, foundations, endowments, and insurers. This article is far more […]
Read more...Several readers sent accounts from the California press on the latest sordid chapter in a long-standing, large scale pay-to-play scandal at the giant California public pension fund, CalPERS. Earlier this month, state papers reported disclosed that the former CEO, Frank Buenrostro, had cut a plea bargain with Federal prosecutors and was turning evidence on his (alleged) former partner in crime, placement agent and former CalPERS board member Alfred Villalobos. We’d heard privately before that story broke that the charges against Buenrostro were about to be greatly expanded, which is likely what lead the former CEO to fold. But as a CalPERS insider told us, “It was a race to see who was going to cut a deal first.”
Read more...On Monday, the Sacramento Bee published an editorial that took up many of the issues that we’ve raised in recent months about private equity firms’ fee abuses and the extraordinary shroud of secrecy that the industry has thrown over most of its activities.
Read more...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.
Read more...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?
Read more...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.
Read more...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.
Read more...Rob Johnson, political insider and executive director of INET, discusses the role of Big Finance in state and local budget woes.
Read more...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.
Read more...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.
Read more...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.
Read more...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.
Read more...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.
Read more...Why private equity returns are nowhere near as juicy as most investors in private equity believe.
Read more...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.
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