Private Equity Firm KKR To Pay SEC $30 Million For Misallocating Expenses

By Francine McKennaMarketWatch Pulse

The Securities and Exchange Commission announced Monday that Kohlberg Kravis Roberts & Co. will pay $30 million in fines, including a $10 million penalty for misallocating more than $17 million in so-called "broken deal" expenses in its private equity funds. During a six-year period ending in 2011, KKR incurred $338 million of these expenses and, in a breach of its fiduciary duty, did not allocate them to co-investors, including KKR executives, or disclose that decision to other investors, according to the SEC. According to the SEC's Director of Enforcement this is the first SEC case to charge a private equity adviser with a violation of this kind.

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