SEC hits Lightyear Capital for overcharging clients (December 2018)

Lightyear Capital will pay a $400,000 fine and reimburse clients for overcharging fund investors during a 16-year period.

Lightyear is a registered investment advisor that manages flagship private equity funds and employee funds, and is the primary owner of the independent broker-dealer Advisor Group. The US Securities and Exchange Commission (SEC) found that it did not proportionally allocate legal, consulting, insurance, and other expenses to co-investors and employee co-investment funds, thereby overcharging investors in their flagship funds. The firm also paid portfolio company consulting fees to co-investors, which resulted in lower offset fees to the detriment of flagship fund investors. Further, it failed to adopt written policies and procedures reasonably designed to prevent violations of the Advisers Act or its rules in connection with how it allocated fees and expenses.