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Europe: PE may have peaked, but comp won’t next year – Plus: the SEC gets real

European comp tipped to increase for finance division in 2020; a categorized timeline of SEC enforcement actions; qashqade on modernizing your approach to waterfall calculations.

Compensation: If you’re a European professional in the finance department of a private equity firm, this was a good year, and 2020 looks even better. Finance department positions accounted for some of the-largest increases in compensation across European PE firms last year, according to a survey by MM&K, Holt Private Equity Consultants and sister publication Buyouts. It may be that PE has peaked in Europe (though VC is still very strong) – exit, fundraising and deal activity were all lower over the six to nine months of 2019 compared with the same periods last year. But most firms expect to add to their administrative and support role headcount, and people already in those roles expect a boost to their compensation next year. That’s in part because of the large amount of dry powder firms have.

The SEC gets real: As I mentioned in yesterday’s note, it was a very busy year for the SEC. It enforced $4.3 billion in monetary penalties against investment advisors and investment companies alone in the fiscal year. That’s a nearly 77 percent increase on FY 2018. Here, I break down the big ones, with an emphasis on PE, into several categories: “Expensive fee fines” (enforcements for misallocation of fees and expenses), “Dubious claims” (fraud) and “Too many hats” (CFOs who also play a CCO role — something the SEC seems to particularly dislike). I list the firms enforced against, dates of the action, and give a summary of the cases, and link to the action’s page on the SEC’s site. If you open one a day, it will take you Christmas, so you can think of it as a kind of grim regulatory advent calendar. My gift to you.

qashqade on waterfalls: In this sponsored article, qashqade’s Oliver Freigang and Gregor Kreuzer explore different options for firms seeking to modernize their approach to calculating waterfalls.