Centre Partners Management, a US mid-market private equity firm, has been fined $50, 000 and reprimanded by the Securities and Exchange Commission for failing to disclose numerous conflicts of interest to its clients.
The firm, which has $880 million in assets under management, was found to have breached SEC regulations between 2001 and 2014.
In a filing, the regulator said CPM had maintained a service provision relationship with an IT company, in which three of its principa’s had made personal investments. CPM principals also occupy two of the three seats on the company’s board, and the wife of one is related to the company’s chief executive.
CPM also used the IT company to complete the due diligence of potential portfolio companies. CPM did disclose this fact, presenting it as a competitive advantage to investors. However, the other potential conflicts were not disclosed, flouting the fund’s own governance rules, as well as SEC regulations.