Blackstone : SEC Asks Addl. Information On Monitoring Fee Termination Practices

(RTTNews) - Blackstone Group L.P. (BX) said that recently, the SEC has informally requested additional information about the company's historical monitoring fee termination practices. The SEC also has asked for additional information about certain pre-2011 practices relating to the application of disparate vendor discounts to Blackstone and to funds that were changed in 2011 and had also been previously reviewed by the SEC in 2012.

"We are in discussions with the SEC regarding a potential resolution of these matters," Blackstone said in regulatory filing.

The SEC has publicly indicated that it is specifically focused on private equity practices regarding fees and other conflicts of interest, including, among other things, the widespread industry practice of receiving fees from portfolio companies in connection with the termination of monitoring agreements upon the initial public offering or disposition of such companies.

The SEC had reviewed Blackstone's historical monitoring fee practices in 2011 - 2012 in their regular exam process. Following this exam, the company expanded the disclosure that was already being made to private equity investors regarding such fees. In June 2014, the company voluntarily modified its monitoring fee practices in ways that are beneficial to its private equity investors, including eliminating any such payments beyond the year of sale for full dispositions and limiting payments following IPOs.