KKR to pay $30M for years of wrongly charging investors (2024)

Henry Kravis has a fee problem.

Kravis’ private equity powerhouse KKR & Co. on Monday agreed to pay $30 million to settle allegations it passed on to outside investors fees that its partners should have been charged.

The practice lasted for six years, until 2011, according to the Securities and Exchange Commission.

It resulted in Kravis and his fellow insiders paying nothing in “broken deal” fees. The insiders sidestepped more than $17 million in fees, the SEC said.

KKR’s outside investors were kept in the dark about the practice, the SEC alleged.

It is the first time a major PE firm has been charged with misallocating fees.

The case comes at a time when both the SEC and PE investors are paying closer attention to fees.

As part of the settlement, KKR did not admit or deny any wrongdoing.

“Before 2011, KKR had not considered whether to allocate or attribute broken deal expenses to KKR Co-Investors because in its view the flagship PE Funds bore all broken deal expenses,” the SEC said in its order.

Broken deals were instances in which KKR attempted to buy a company but failed.

“This resolution, which relates to historical expense allocation disclosures and policies and not to any current practices, allows us to focus on delivering value for those who invest with us,” KKR said in a statement.

While the settlement is small compared to the billions of dollars KKR has raised, it is not the first time the Kravis firm has been found to have pushed the envelope on fees — and in each case KKR executives got richer.

Last year, KKR was exposed for allegedly keeping fees that KKR Capstone, its consulting arm, collected from KKR portfolio companies.

The fees, paid by the companies for getting discounts on group purchases of such items as office supplies, should have been shared with outside investors.

KKR insiders kept all the fees. Kravis and other owners shared the fees only after media reports highlighted the practice.

KKR, as of March 31, had invested $4.5 billion — 52 percent — of the $8.7 billion flagship private equity fund it raised in 2012, so the firm will likely launch a new buyout fund in the next year or two.

Besides allegedly over-charging its own investors, Kravis last year — along with six other PE co-defendants — settled a civil federal case brought by shareholders who alleged that they were cheated out of profits because the PE firms colluded when buying the companies they owned stock in.

The alleged collusion kept the price of the takeovers artificially low, it was alleged.

KKR settled after much of the case had survived summary judgment and was headed to a jury trial.

The fee problem is not new.

Sarah Bartlett, in her 1991 book, “The Money Machine: How KKR Manufactured Power and Profits,” alleged that Kravis charged excessive fees.

KKR responded: “We take our fiduciary responsibilities seriously and have strived to adapt our policies and practices to the changing nature of the industry, market and our business.”

KKR to pay $30M for years of wrongly charging investors (2024)
Top Articles
Angkor Wat, the largest temple, now the 8th Wonder of the World
13 key ESG and sustainability trends, ideas for companies | TechTarget
Is Sam's Club Plus worth it? What to know about the premium warehouse membership before you sign up
Cold Air Intake - High-flow, Roto-mold Tube - TOYOTA TACOMA V6-4.0
Craigslist Niles Ohio
Wizard Build Season 28
Readyset Ochsner.org
Apex Rank Leaderboard
Elden Ring Dex/Int Build
Atrium Shift Select
Skip The Games Norfolk Virginia
Oppenheimer & Co. Inc. Buys Shares of 798,472 AST SpaceMobile, Inc. (NASDAQ:ASTS)
Elizabethtown Mesothelioma Legal Question
Missing 2023 Showtimes Near Landmark Cinemas Peoria
Sony E 18-200mm F3.5-6.3 OSS LE Review
Gino Jennings Live Stream Today
Munich residents spend the most online for food
Tamilrockers Movies 2023 Download
Katherine Croan Ewald
Diamond Piers Menards
The Ultimate Style Guide To Casual Dress Code For Women
Site : Storagealamogordo.com Easy Call
Is Windbound Multiplayer
Filthy Rich Boys (Rich Boys Of Burberry Prep #1) - C.M. Stunich [PDF] | Online Book Share
Integer Division Matlab
Sandals Travel Agent Login
Horn Rank
Ltg Speech Copy Paste
Random Bibleizer
Craigslist Fort Smith Ar Personals
The Clapping Song Lyrics by Belle Stars
Poe T4 Aisling
R/Sandiego
Kempsville Recreation Center Pool Schedule
Rogold Extension
Beaver Saddle Ark
Log in or sign up to view
A Man Called Otto Showtimes Near Amc Muncie 12
Powerspec G512
Saybyebugs At Walmart
2007 Jaguar XK Low Miles for sale - Palm Desert, CA - craigslist
Miami Vice turns 40: A look back at the iconic series
Love Words Starting with P (With Definition)
Tlc Africa Deaths 2021
Youravon Com Mi Cuenta
Nope 123Movies Full
Kushfly Promo Code
Diario Las Americas Rentas Hialeah
Game Akin To Bingo Nyt
Marion City Wide Garage Sale 2023
Latest Posts
Article information

Author: Van Hayes

Last Updated:

Views: 6170

Rating: 4.6 / 5 (66 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Van Hayes

Birthday: 1994-06-07

Address: 2004 Kling Rapid, New Destiny, MT 64658-2367

Phone: +512425013758

Job: National Farming Director

Hobby: Reading, Polo, Genealogy, amateur radio, Scouting, Stand-up comedy, Cryptography

Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.