The Securities and Exchange Commission filed and settled charges against Apollo Commodities Management, L.P., a private equity fund adviser, and three other Apollo Management private equity fund advisers (Apollo Management V, VI, and VII, L.P.; collectively, all four entities, “Apollo”) for their inadequate disclosure to investors and a supervision lapse. The SEC charged that, from at least December 2011 through May 2015, Apollo accelerated the assessment of annual monitoring fees due from certain portfolio companies it advised upon the private sale or initial public offering of such companies. However, claimed the SEC, Apollo failed adequately to disclose in advance to the portfolio companies or their limited partners that the payment of such fees might be so accelerated. In addition, the SEC claimed that Apollo Management VI (AMVI) failed adequately to disclose on certain funds’ financial statements that, in connection with loans granted by the funds, an affiliated general partner of AMVI, not the funds, would receive interest payments. Finally, the SEC claimed that after a former Apollo senior partner was determined to have impermissibly charged personal items and services to Apollo-advised funds and the funds’ portfolio companies in 2010 and 2012, Apollo did nothing more than require the partner to reimburse the entities and reprimand the manager. Subsequently, Apollo engaged outside counsel who determined that the partner had charged additional personal expenses to Apollo-advised funds and the funds’ portfolio companies from January 2010 to June 2013. The partner reimbursed the entities for these expenses too and entered into a separation agreement with Apollo. The SEC claimed that Apollo failed “reasonably to supervise” the partner. To resolve the SEC’s allegations, Apollo agreed to disgorge US $40.2 million to compensate investors and to pay a fine of US $12.5 million. In October 2015, the SEC brought and settled similar charges against three affiliated Blackstone Group investment advisers for likewise not disclosing adequately to investors that they might accelerate certain management fees when they ceased advising certain investment companies. (Click here for details of this enforcement action in the article, “SEC Alleges Investment Advisers’ Failure to Disclose Pocketing of Legal Fees Discount Constitutes Conflict of Interest” in the October 11, 2015 edition of Bridging the Week.)