Fenway Partners and four of its executives will pay about $10.2 million total to settle charges by the SEC that they failed to disclose conflicted arrangements to a fund client and investors, the Securities and Exchange Commission said in a news release Tuesday.
The SEC alleges certain former and current Fenway Partners executives weren’t “fully forthcoming” to a client and investors about “several transactions involving more than $20 million in payments” out of Fenway Capital Partners Fund III assets or portfolio companies to affiliate Fenway Consulting Partners and certain former employees for services they provided primarily during their time at the private equity manager.
Specifically, Fenway Partners failed to disclose to the fund client “that they had rerouted portfolio company fees to (Fenway Consulting Partners), and avoided providing the benefits of those fees to the fund client in the form of management fee offsets,” said Andrew J. Ceresney, director of the SEC enforcement division, in a news release.
The SEC also claims Fenway Partners failed to disclose to investors information on the arrangements with Fenway Consulting Partners and former Fenway Partners employees to its investors.
“We are pleased that the matter has been resolved,” a Fenway Partners spokesman said in an e-mail.
Investors in Fenway Capital Partners Fund III include the $69.7 billion Oregon Public Employees Retirement Fund, Salem; $34.6 billion New York City Police Pension Fund; $10.9 billion New York City Fire Department Pension Fund; and $8 billion Rhode Island Employees’ Retirement System, Providence.