Forbes recently reported on the settlement between Robert Pinkas’ financial advisory firm Brantley Capital Management and the SEC. The SEC alleged that Pinkas significantly overstated the value of equity and debt investments in two failing private companies. The Federal judged ordered the firm to pay just under $1 million.
“The issue of valuing hard-to-value assets has hovered over all sorts of investment funds holding illiquid assets ever since the credit crisis hit financial markets,” writes Nathan Vardi. “In some cases over the last year or so, prosecutors and securities regulators have undertaken investigations, but such cases are tough to prove because in the end these valuations are opinions, often signed off on by third-party valuation consultants and auditors. It would clearly be a challenge to litigate such a case,” he adds. However, the SEC enforcement division’s asset management unit is focusing on valuation issues, according to Robert Khuzami of the SEC.
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