The SEC has targeted valuation as a serious compliance concern for private equity funds. It was not only listed in the SEC’s 2013 enforcement priorities, but also discussed by agency leaders at a New York City Bar program on SEC enforcement.
And, according to a recent study, it may be for good reason. Researchers at Oxford University found that funds tend to inflate their performance data when trying to seek new capital.
The study, which examined 761 funds that received investments from the California Public Employees’ Retirement System (CalPERS), found that funds generally value their portfolios conservatively. However, the trend disappeared during fundraising.
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