US SEC reviews private equity continuation funds – report

The US Securities and Exchange Commission's enforcement limb is examining continuation vehicles utilized by backstage equity firms and different plus managers to support clasp of assets they are unwilling oregon incapable to sell, reported Reuters.

According to the sources cited by the quality agency, unit person successful caller months focused connected respective continuation vehicles, oregon CVs.

Their enactment is looking astatine imaginable conflicts of interest, plus valuation practices, and whether disclosures to investors are capable and consistent.

Reuters was not capable to found which funds are progressive oregon what assets they contain.

Continuation vehicles fto managers determination assets from older backstage equity funds into a caller operation backed by caller investors.

This extends the holding play and gives existing investors the prime to exit.

The structures person go much utile arsenic higher involvement rates person made income harder, peculiarly aft firms bought assets astatine elevated valuations during the play of inexpensive wealth successful the pandemic, the quality bureau said.

Sources said that, since precocious past year, enforcement unit person besides tried to make an informal "working group" with the examinations, concern absorption and different divisions to amended co-ordination and information-sharing connected the backstage recognition market.

Although SEC examiners person been looking astatine backstage money matters, including continuation vehicles, for immoderate time, the engagement of the enforcement part suggests broader interest wrong the bureau astir risks successful backstage markets.

Last month, SEC Chair Paul Atkins said the bureau is investigating allegations ‌of fraud ⁠in backstage recognition firms, without giving further detail.

Enforcement manager David Woodcock said the SEC is "attuned to imaginable risks relating to liquidity, fees, valuations, and conflicts of interest" crossed the sector.

"US SEC reviews backstage equity continuation funds – report" was primitively created and published by Private Banker International, a GlobalData owned brand.