A coalition of public pension fund trustees wants the Securities and Exchange Commission to require more disclosure of private equity fees.
A letter sent Tuesday to SEC Chairwoman Mary Jo White by 13 state and municipal treasurers and comptrollers representing $1 trillion in public pension fund assets calls for an industrywide standard to give private equity limited partners more transparent and frequent information on fees and expenses.
There are four types of private equity firm expenses, but only directly billed management fees are regularly provided to investors, while information on fund expenses, allocated incentive fees and portfolio-company charges “are often reported deep in annual financial statements, and only on an annual basis,” said the letter signed by officials from the District of Columbia, California, New York, Virginia, Wyoming, North Carolina, South Carolina Rhode Island, Vermont, Nebraska, Oregon and Missouri.
“It's time to take the detective work out of how private equity managers report their fees,” said New York City Comptroller Scott M. Stringer, fiduciary for the five public pension funds in the $163.4 billion New York City Retirement Systems. “Billing practices are cryptic at best and many partnership statements are so vague they could be considered purposefully opaque.”
Coalition members want more consistent and comparable fee disclosures, and said the SEC is in the best position to make those changes. North Carolina Treasurer Janet Cowell, sole trustee of the $90 billion state pension fund, said in a statement that while her state collects and reports private equity performance and fees, “the time has come to require standardized and comprehensive reporting from private equity firms to level the playing field."
The letter is available at the New York City comptroller's website.
