How to divvy up carry, plus, the perils of being a small-firm CCO

CFOs & COOs Forum 2020 update: Our annual forum in New York, coming up fast, has an updated brochure you can check out here to see the latest featured speakers, agenda-at-a-glance and confirmed attendees.

Cracking the carry allocation conundrum: Veteran private equity recruiter Gail McManus gives us an incisive inside look at what she says does and doesn’t work when allocating carry to PE fund employees. It’s a debate that’s been going on for decades, but the right way to do it will depend on a number of factors: type and size of fund, fund age and philosophy, and even the stage of working life that employees of varying seniority are in. Divvying up carry in a way that keeps everyone satisfied is tricky business, and McManus brings us some of the key observations she’s made about it over the last 20 years.

The perils of being a small-firm CCO: From our colleagues at RCW, republished here: a recent case of the SEC upholding sanctions against the CCO of 15-rep broker-dealer Ocean Cross Capital Markets, which counts private equity among its business lines. The SEC took into account the competing demands on a CCO’s time when upholding the sanctions, but said that the CCO nonetheless failed to enforce his firm’s own supervisory procedures governing the review of electronic correspondence.

Allen update: NYPPEX chief Laurence Allen called yesterday to clarify what he says is a misunderstanding that the New York attorney general’s office has about the investment limitations of his funds. “What the NYAG is failing to understand is that I control several companies that have affiliate service agreements, where the companies can do business with one another, including making investments in one another,” he said. “That agreement has been reviewed and approved by our regulator, which is Finra, for 12 years plus.”

The strategic CFO: In this sponsored article, SANNE’s Fred Steinberg talks about what LPs are looking for in a fund CFO, the growing demands on CFOs, what LPs expect when processes are outsourced, what kind of information they want to see and how they want it presented to them.