KKR will not lose its status as an eligible securities issuer, following its settlement Monday with the Securities and Exchange Commission over improper fees.
The SEC can designate a firm an “ineligible issuer” if it has been the subject of a judicial or administrative order within the past three years. KKR applied for a waiver from those rules on Monday after reaching a settlement with the SEC over charges that from 2006 to 2011 it had charged investors in its private equity funds for broken-deal expenses. In the settlement, KKR agreed to pay $17.4 million plus $4.5 million in interest and a $10 million civil penalty.
The commission decided to let KKR keep its status as a “well-known seasoned issuer,” saying in a written order that the firm “made a showing of good cause” through the settlement.
In KKR's request for the waiver, Deveboise & Plimpton law firm partner Jonathan Tuttle argued on behalf of KKR that disqualifying the firm “would be an unduly severe consequence in light of the conduct described in the settlement order and would unfairly cause the parent company and its unit holders to incur additional regulatory burdens and costs for conduct that has been discontinued and remedied.” Ineligibility, Mr. Tuttle wrote, “is not necessary under the circumstances, either in the public interest or for the protection of investors.”
