At a time of growing scrutiny around private equity valuation practices, a fund managed by Oppenheimer Holding has undergone a months-long investigation by the Securities & Exchange Commission and the Massachusetts attorney general for allegedly overstating the value of one of its portfolio companies, reported the Wall Street Journal (WSJ), citing people close to the matter.
The fund’s value was as a result overestimated by more than $4 million, the paper said, citing documents shared with Oppenheimer investors.
Perhaps crucially, the report said the alleged ballooned figures came at a time when the fund was soliciting investors in late 2009, and helped push the fund's reported internal rate of return to 38 percent, after fees, from a 6.3 percent loss.
The fund went on to raise some $55 million from LPs, the paper said, adding the vehicle and related assets were spun off by Oppenheimer Holdings this year.
Oppenheimer was not available for comment outside normal US business hours.
However a spokesperson for the investment firm told the WSJ the allegations were without merit. Oppenheimer launched an internal probe after learning of the allegations last year and had concluded the valuation increase was within US accounting standards, the paper said.