Staying mum on performance

The Blackstone Group has refused to release more detailed information about the returns of its buyout and hedge funds and how it compensates senior executives, despite a request from the US Securities and Exchange Commission.

In a 31 October 2008 letter, the SEC asked Blackstone to disclose additional information on a number of topics in its annual report, such as the names of its funds, inception dates, assets under management as of each period presented, net annualised returns since inception and net returns for each period presented. “In order to help investors better understand how fund performance affects your financial statements, please revise to provide performance information for each of your funds for each period presented,” the SEC's Richard Decker said in the letter.

But while Blackstone filled in many of the gaps, it declined in a 5 December letter to meet all the SEC's demands, even though Fortress Investment Group agreed to a similar request to include fund performance in its investment reports. Both firms have been publicly listed since holding IPOs in 2007.

It added that it does not believe “disclosure of detailed performance information … for each of the investment funds that we manage for each period presented is either required by Regulation S-K or, more importantly, a meaningful measurement of our results of operations”, chief operating officer Laurence Tosi wrote.

“The individual rates of return have no direct impact on our financials and therefore we question the relevance to our investors,” Tosi said. “The relevant information for investors is the enhanced disclosure regarding the changes in our assets under management.”

Blackstone also refused an SEC request to disclose performance measurements used to determine the size of its bonus pool and other targets that executive officers must meet to earn bonuses, arguing bonuses are at the discretion of chief executive Stephen Schwarzman and senior chairman Pete Peterson.

“The performance measurements used to determine the size of the bonus pools are not material to the discussion of the compensation awarded to, earned by or paid to our named executive officers,” Tosi said.