SEC names Karpati’s replacement

Julie Riewe and Marshall Sprung have been named permanent co-chiefs of the US Securities and Exchange (SEC) unit responsible for policing private fund managers.  

The pair were named deputy chiefs of the Asset Management Unit (AMU), a part of the Division of Enforcement, following the departure of Bruce Karpati, who in May rejoined the private sector as chief compliance office of Prudential Investments.

Sprung, formerly a litigation associate at Gibson, Dunn & Crutcher, worked in the agency’s Los Angeles office since 2003. Riewe joined the SEC in 2005, having previously acted as a litigation associate at Wilmer Cutler Pickering Hale and Dorr. 

During their time at the agency both officials have gained experience investigating private fund misconduct. According to the SEC, Riewe spearheaded an investigation into Oppenheimer & Company for allegedly puffing up the value of one of its holdings, which culminated in a six-figure settlement in March. She also led an investigation into a former associate of TPG Capital, as well as three others, with illegally profiting from sharing confidential information related to three TPG deals.

Sprung meanwhile led efforts to charge a former $1 billion hedge fund advisory firm, Yorkville Advisors, and two executives with scheming to overvalue assets under management and exaggerate the reported returns of hedge funds they managed, among other cases. 

The two have “been instrumental in developing several proactive risk-based initiatives to address emerging risks in the asset management industry”, the SEC said. In the past SEC officials have named conflicts of interest, valuation policies and fee disclosures as areas of importance. 

The AMU boasts a team of around 75 lawyers and industry experts who were assembled to provide the SEC greater expertise in supervising alternative asset managers. For GPs who complain that some SEC auditors don’t understand enough about how private equity is different from other types of investment advisers, the unit sought to ease those concerns.