Published On: August 24, 2016

On Tuesday, the Securities and Exchange Commission (SEC) fined Apollo Global Management $52.7 million for allegedly breaching its fiduciary duty. Apollo was accused of failing to disclose fees and conflicts of interest to investors. It also failed to adequately disclose to its limited partners that it may accelerate future fees for monitoring portfolio companies when it ended consulting and services agreements. The firm also allegedly failed to supervise a senior partner who charged personal expenses to the funds. The executive who was charged was not named, but was twice caught “improperly charging personal items and services” to Apollo’s funds and its investors. His misconduct took place from early 2010 until mid-2013 and his transgressions included “fabricating information to Apollo in an effort to conceal his conduct.” His investigation is ongoing.

This is the latest in the SEC’s crackdown of private equity firms. Over the last years, the SEC has taken action against 10 private equity firms, including the Blackstone Group and Kohlberg Kravis Roberts & Company. Most of the firms were investigated and fined because of their failure to properly disclose fees and conflicts of interest to fund investors. In the case of Apollo, the SEC claims that the firm failed to fully inform its investors about so-called monitoring fees. The firm charges those fees to some of the companies it owns, and Apollo claims that it is entitled to collect on the consulting and advice it provides these companies.

The SEC also found that Apollo was “accelerating” the monitoring fees when one of its companies was sold or went public. Upon the sale of an IPO, for example, Apollo would turn the years of fees into one lump-sum payment, which would effectively reduce the “amounts available for distribution to fund investors.” Apollo was also accused of failing to fully disclose its practice of accelerating monitoring fees before clients invested in the firm. Apollo was also supposed to pay interest to funds from which it took out loans. The SEC found that that interest was “instead ultimately allocated solely” to the Apollo affiliate itself.


The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


Chicago Investment Fraud Attorneys Offering Nationwide Representation to Investors

If you have suffered financial losses because of the negligence or fraud of your financial advisor or broker through unsuitable investment recommendations, over-concentration, churning, misrepresenting risks, conversion or selling away, you have legal rights and options to pursue recovery of those losses.

Stoltmann Law Securities Investment Fraud Attorneys