This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Portfolio Manager Charged with Padding Performance of Private Equity Fund

By Hal M. Bundrick

NEW YORK ( MainStreet)--In the securities business, enhanced performance is not a good thing. The Securities and Exchange Commission has charged a former portfolio manager at Oppenheimer & Co. with greatly overstating the value and performance of a private equity mutual fund.

The SEC says Brian Williamson issued quarterly reports and marketing materials on the fund-of-funds offering, claiming the valuation of the holdings was based on values reported by the portfolio managers of those underlying funds. But Williamson significantly inflated the value of the mutual fund's largest investment. He also distributed marketing materials reporting an internal rate of return without deducting fees and expenses. As a result, the fund's reported performance as measured by its internal rate of return - a key indicator of the fund's performance - was significantly enhanced.

"Investors deserve and the law requires honest disclosure about how their investments are valued," said Andrew J. Ceresney, co-director of the SEC's Division of Enforcement. "Williamson improperly lured investors to the private equity fund he managed by providing false and misleading information about the fund's performance."

Earlier this year, Oppenheimer agreed to pay $2.8 million in a settlement of related charges.

The Oppenheimer Global Resource Private Equity Fund I, L.P. was marketed to pensions, foundations, endowments, and high net worth individuals and families. The SEC investigation says that Williamson modified the fund's marketing materials in October 2009 by increasing the reported value of the fund's largest investment -- Cartesian Investors-A LLC - from $6 million to approximately $9 million, increasing the reported internal rate of return from approximately 3.8% to 38.3%.

"Interim valuations are especially important when used to raise funds in the private equity industry," said Julie M. Riewe, Co-Chief of the SEC Division of Enforcement's Asset Management Unit. "Private fund managers must provide investors with accurate disclosures about valuation methodologies as well as fund fees and expenses so they can make fully informed investment choices."

--Written by Hal M. Bundrick for MainStreet

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs