The Securities and Exchange Commission announced two settled enforcement actions against private equity fund advisers last week involving certain fee practices and potential conflicts of interest. Consistent with its approach in other enforcement actions against private equity firms, the SEC did not brand the fee practices and potential conflicts themselves as fraudulent. Instead, the SEC’s orders framed the violations as disclosure failures.

These two recent actions are consistent with the SEC’s approach to enforcement in the private equity industry. SEC Director of Enforcement Andrew Ceresney has repeatedly stressed the Division’s focus on disclosure, and has said he believes this emphasis is achieving the intended result by encouraging industry discussions around whether certain fees and arrangements are appropriate. Indeed, in the press release announcing one of last week’s settlements, Ceresney stated that, “A common theme in our recent enforcement actions against private equity firms is their failure to properly disclose fees and conflicts of interest to fund investors.”