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SEC penalizes private equity fund advisers at Oppenheimer for misleading investors

The US Securities and Exchange Commission (SEC) has sued two New York-based investment advisers at Oppenheimer & Co for deceiving investors about the valuation policies and performance of a private equity fund.

As per the regulator’s proceedings, the advisers marketed Oppenheimer Global Resource Private Equity Fund I L.P. (OGR) to investors from October 2009 to June 2010.

Oppenheimer Asset Management and Oppenheimer Alternative Investment Management circulated misleading reports and materials stating the fund’s holdings of other private equity funds were valued "based on the underlying managers’ estimated values," SEC said.

OGR’s largest investment, Cartesian Investors-A, was not valued based on the underlying managers’ estimated values, according to SEC’s order.

SEC enforcement division acting director George Canellos said, "Honest disclosure about how investments are valued and how performance is measured is vital to private equity investors."

"This action against Oppenheimer for misleadingly writing up the value of illiquid investments is clear warning that the SEC will not tolerate lax disclosure practices in the marketing of private equity funds."

In order to settle the charges, Oppenheimer has agreed to reimburse a $617,579 penalty and pay back $2,269,098 to those who invested in OGR during the time period.

The firm has also agreed to an additional penalty of $132,421 to the Commonwealth of Massachusetts in the related action taken by the Massachusetts attorney general.