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(Reuters) — Private equity giant Kohlberg Kravis Roberts & Co. will pay nearly $30 million to settle civil charges that it misallocated more than $17 million in expenses and breached its fiduciary duty to clients, U.S. regulators said.
The settlement marks the most high-profile case brought by the U.S. Securities and Exchange Commission to date against a private equity firm over fees and expenses, an area the SEC is actively investigating throughout the industry.
The SEC's case against KKR centered on "broken deal" expenses relating to the firm's unsuccessful attempts to buy companies.
Those expenses, totaling $338 million during a six-year period ending in 2011, were incurred by KKR private equity fund investors such as pension funds, endowments and other institutional investors.
KKR, however, did not expressly disclose to these fund investors that its own executives and institutional investors would not have been charged for broken deal expenses had they invested with the help of KKR in the same companies but without going through the same funds.
KKR, however, did not expressly disclose to these fund investors that its own executives and institutional investors that would have invested with the help of KKR in the same companies, but without going through the same funds, would not be charged for broken deal expenses, according to the SEC.
In a statement, KKR said the settlement relates to "historical expense allocation disclosures and policies and not to any current practices."
"We take our fiduciary responsibilities seriously and have strived to adapt our policies and practices to the changing nature of the industry, market and our business."
KKR neither admitted nor denied the allegations in its settlement with the agency.
(Reuters) — Gardner Denver has agreed to pay $29 million to its former shareholders to settle allegations the industrial pumps producer was undervalued in its $3.7 billion sale last year to private equity firm KKR & Co., according to court documents.