The Blackstone Group (NYSE:BX) agreed to pay $39 million to settle charges that the Securities and Exchange Commission (SEC) brought against them. The SEC charges were related to the disclosure failures by Blackstone’s three private equity fund advisers. $29 million of the total settlement will go to the affected fund investors. Blackstone Management Partners, Blackstone Management Partners III and Blackstone Management Partners IV did not provide investors with enough information regarding the benefits obtained from accelerated monitoring fees and discounts on legal fees. They also failed to disclose adequately the acceleration of monitoring fees paid by fund-owned portfolio companies prior to its sale or initial public offering (IPO). The value of the fund decreased because of the payments to the companies themselves. The companies also failed to implement adequately supervised policies and procedures. Blackstone was in breach of its fiduciary duty.
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