Apollo pays SEC $53m for misleading investors

The settlement follows an investigation by SEC regarding the alleged acceleration of payment of future monitoring fees owed by portfolio companies upon their sale. The investigation found that lump sum payments received by advisers reduced valuations and thus lowered returns for investors.

A second charge relates to interest payments on loans from one adviser allegedly intended to “defer taxes on carried interest”. The SEC also said in a statement that interest accrued should have been directed into the GP’s funds but was instead being paid “solely to the general partner”.

The director of SEC's enforcement division, Andrew Ceresney, said in a statement: “Investors in Apollo funds were not adequately informed about accelerated monitoring fees and separately allocated loan interest, and therefore were unable to gauge their impact on their investments.”

SEC also alleged that a former senior partner was caught charging personal items and services to Apollo-advised funds and portfolio companies on two occasions. It said the firm took no remedial or disciplinary action other than to verbally reprimand the partner and require the repayment of all relevant expenses.

Apollo released a statement in response to the development, in which it said the firm “seeks to act appropriately and in the best interest of the funds it manages at all times”. The firm did not confirm or deny the accusations, though it said it had enhanced its relevant disclosure and compliance “long before” the SEC inquiry began.

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• Topics
• GPs
• Regulation
• Fees and Transparency
• US
• Apollo Management