The Securities and Exchange Commission has announced that a former Oppenheimer & Co. portfolio manager has agreed to be barred from the securities industry and pay a $100,000 penalty for making misrepresentations about the valuation of a fund consisting of other private equity funds.
The SEC announced administrative proceedings against Brian Williamson last August based on allegations that he disseminated information falsely claiming that the reported value of the fund’s largest investment came from the portfolio manager of the underlying fund. Williamson, who managed the fund of funds, actually had valued the investment himself at a significant markup to the value estimated by the underlying fund’s portfolio manager. Williamson sent marketing materials to potential fund investors reporting a misleading internal rate of return that failed to deduct the fund’s fees and expenses. Williamson also made false and misleading statements to investor consultants and others in an effort to cover up his fraud.
'Investors rely on truthful and complete disclosures about valuation methodologies and fund fees and expenses, especially when committing to a long-term private equity investment', said Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit. 'Williamson misled prospective investors by marking up the fund’s interim valuations and concealing his role in enhancing its reported performance'.
Last year, Oppenheimer agreed to pay $2.8m in a settlement of related charges.
image: © John M