Fee Transparency In Private Equity Funds

In May 2014, Andrew J. Bowden, the then-director of the Securities and Exchange Commission's ("SEC") Office of Compliance Inspections and Examinations, gave a speech addressing various issues in the private equity industry ("Sunshine Speech"). In the Sunshine Speech, Bowden highlighted several matters of concern related to private equity fees and expenses that the SEC observed in its examinations, including inadequate disclosure of fees and expenses, and collection of hidden fees.¹ Although there have been some positive changes since the Sunshine Speech, such as investors' increased focus on fees and expenses and general partners' detailed discussion of fees and expenses in Part 2A of Form ADV,² Limited Partnership Agreements and other offering documents, there is still room for further improvement. This article identifies two common issues with fee transparency in the private equity industry and examines the Institutional Limited Partners Association's ("ILPA") Fee