Davis Polk partner Michael Hong was quoted in Private Equity Law Report on a recent settlement Order from the SEC alleging that a fund manager misled investors about charging the “industry standard ‘2 for 20’” feeds to their funds and engaged in improper fund loans, cash transfers and loans to other affiliate funds. Michael noted that the Order is consistent with other recent actions taken by the SEC.

Michael also discussed the various topics in the Order, including accelerated fee charges, inter-fund loans and sponsor-funded loans, and preventative measures that funds can adopt in light of the Order.

“SEC Sanctions Adviser for Misleading “2 and 20” Fee Claims and Improper Inter‑Fund Loan Practices,” Private Equity Law Report (April 5, 2022) (subscription required)

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