March 11 Oppenheimer & Co will pay more than
$2.8 million to settle charges that it misled investors about
the performance and policies of a private equity fund, the U.S.
Securities and Exchange Commission and Massachusetts regulators
said on Monday.
Oppenheimer's valuation of the largest investment of the
fund, the Oppenheimer Global Resource Private Equity Fund,
raised the internal rate of return from 3.8 percent to 38.3
percent, the regulators said in statements.
Oppenheimer also told investors certain information was
vetted and audited by independent third parties, which was not
the case, according to officials.
The fund was sold mainly to state entities, endowments and
high net-worth individuals.
Oppenheimer settled with authorities without admitting or
denying the allegations. It consented to a censure, the SEC
Fund investors included pension funds of the cities of
Brockton and Quincy in Massachusetts, the state's attorney
general, Martha Coakley, said in a statement.
Officials said that Oppenheimer Asset Management and
Oppenheimer Alternative Investment Management sent out
misleading quarterly reports and marketing material that claimed
the fund's holdings of other private equity funds were valued
"based on the underlying managers' estimated values."
But the portfolio manager of the fund had set the value of
the fund's biggest investment at a significant markup from the
underlying managers' estimated value, officials said.
Oppenheimer is required by the settlement to hire an
independent compliance consultant, officials said. The firm will
pay a $617,579 penalty and return $2,269,098 to investors, the
A spokesman for Oppenheimer said in a statement that
Oppenheimer Asset Management cooperated fully with regulators
and is "pleased to put the matter behind us."
"Oppenheimer Asset Management believes it has put in place
additional policies and procedures designed to ensure that
valuations of portfolio positions in its marketing documents are
determined in a manner consistent with its obligations to