For rent by owner

If there is anything we’ve learned from the US Securities and Exchange Commission’s (SEC’s) bright new spotlight on private equity fees, it’s that some of the charges GPs bill to investors are downright ridiculous.

Leaving aside the particularly egregious expenses like college tuition costs and golf club membership dues, which are more fraudulent than they are funny, Clayton Dubilier & Rice seemed to take the cake last year when it was discovered that they were charging LPs’ “administrative” expenses for things like web hosting and phone calls.

We may have found a worse example. At the 2015 PE/VC Finance and Compliance Forum in San Francisco last month, delegates heard about a firm that had the gall to charge visiting LPs for the use of their conference room. Yes, as in there was some hourly or daily rate the CFO was asked to figure out after investors requested a sit-down. Now, what we would like to tell this manager’s investors to do is begin conducting all further business over the phone with the firm – and dump the GP after the fund is finished – but remember that phone charges are an expense in some funds now too.