Private Equity Fund Net Return Investigation
Stueve Siegel Hanson is conducting an investigation of how private equity firms report average net returns in past funds when they market new funds to investors. Net returns, also known as the net internal rate of return (IRR), deduct limited partners' fees and expenses from a fund's gross profits. The private equity firm and its managers, called general partners, also typically invest some of their own money into the funds, but don't pay any fees. Including the general partner's money in the average net returns can artificially inflate the fund’s average net performance figure.
On October 29, 2014, Reuters reported that the U.S. Securities and Exchange Commission is investigating whether private equity fund managers properly disclosed to investors that they were including the general partners’ investment in the fund in computing the funds’ net returns. Including general partner capital in the average net IRR calculation can make a material difference and may make the fund marketing materials false or misleading under the U.S. Investment Advisers Act of 1940 (the "Advisers Act") and under common law.
If you are an institutional investor or high net worth individual that invested in a private equity fund and suspect that the marketing materials provided to you prior to your investment were false or misleading, please contact us immediately by completing the form on this page or by calling us toll-free at 1-800-714-0360.
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