Monthly Archives: January 2022

Enron’s Contribution to the Vitality of Corporate Compliance

Michael W. Peregrine is a partner at McDermott Will & Emery LLP. This post is based on his McDermott Will & Emery memorandum.

Enron shares hit $90.75 on August 23, 2001. By December 2, they had corrected to $0.26 and the business had filed for Chapter 11. Twenty years after the culmination of Enron’s too-close-to-the-sun flight, it’s clear its fallout set the course for the evolution of compliance in the new millennium.

The infamous Enron scandal of 2001 didn’t create the corporate compliance movement. Its roots go back many years, even past the seminal 1996 decision in the Caremark derivative litigation, that established board oversight responsibility for compliance. But Enron, with the sheer breadth of its audacity, gave compliance the vitality that led to its near—institutionalization in the Sarbanes—Oxley Act.


SEC’s Focus on Advisory Fees—Implications for Private Fund Managers

Brian T. DalyJason M. Daniel, and Barbara Niederkofler are partners at Akin Gump Strauss Hauer & Feld LLP. This post is based on their Akin Gump memorandum.

Any doubts over whether the U.S. Securities and Exchange Commission considers advisory fees to be a focus area for 2022 were dispelled over the past several weeks. In four separate public statements, the SEC and the Staff of the Division of Examinations have set the stage for a comprehensive review of the “market” for advisory fees in a private funds context, as well as for a potentially intense review of how fees are disclosed, calculated, and assessed by private fund managers.

The Tone at the Top

The highest profile statement on advisory fees came from SEC Chairman Gary Gensler, who, in recent remarks at the Institutional Limited Partners Association Summit, [1] asserted that fees in the registered funds space have come down considerably since his time on Wall Street, while those in the private funds space have not dropped to the same degree—even as aggregate private fund assets have increased. Benchmarking off the “2-and-20 model,” the Chairman argued that advisory fees, when combined with fees for other services that private equity sponsors and other private fund managers may charge, are “pretty significant to our economy and our capital markets. Hundreds of billions of dollars in fees and expenses are standing between investors and businesses.” The Chairman announced that he has asked the SEC Staff, in an effort to stimulate “more competition” and “greater efficiencies” to the private funds space, to consider rulemaking recommendations aimed at “greater transparency to fee arrangements.”


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