Blackstone Group (BX), the world's largest private equity firm, will pay about $39 million to settle civil charges over disclosure failures in connection with certain types of fees it charged its portfolio companies, U.S. regulators said on Wednesday.
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The settlement between Blackstone and the Securities and Exchange Commission marks the second major case in the regulator's ongoing crackdown into what it sees as a widespread industry problem concerning how buyout firms allocate and disclose various kinds of fees.
Blackstone's case centers on the so-called acceleration of monitoring fees that the New York-based firm was collecting from its portfolio companies prior to their sale or initial public offerings.
The SEC said that the payments Blackstone received "essentially reduced the value of the portfolio companies prior to sale, to the detriment of the funds and their investors."