SEC Enforcement Actions Against Private Equity: Get Ready for More

In a speech delivered at the Private Equity International Conference on January 23, 2013, in New York, Bruce Karpati, Chief of the U.S. Securities and Exchange Commission (SEC) Enforcement Division's Assets Management Unit, warned the private equity industry on the likelihood of increased scrutiny of their operations.¹ The speech, delivered to an audience of COOs and CFOs of private equity firms, was specific regarding the areas of scrutiny of private equity firms' operations, all the while admitting that the SEC is still in the midst of a steep learning curve about the private equity industry and its operations. As a result, private equity firms should be preparing for scrutiny now—that may not indicate a complete understanding of their operations—and continued enhanced review in the future when the SEC catches up on its learning curve. Mr. Karpati's remarks have now, effectively, put the private equity industry on notice of the likelihood of increased cases involving