Oppenheimer Under Investigation For Overvaluing Private Equity Fund To Boost Sales


Oppenheimer and one of its units may have overstated the value of one of its private equity funds at a time when it was promoting the fund to investors in the fall of 2009. It represented that the fund had a 38 percent internal rate of return when it had actually produced a loss of 6.3 percent. After reporting the inflated performance to investors, the fund raised over $55 million from individuals and institutions.

Oppenheimer says it initiated its own internal investigation in June 2011, and found that it did nothing wrong. The U.S. Department of Justice, the Massachusetts Attorney General, and the Securities and Exchange Commission are not satisfied with Oppenheimer’s internal investigation, and have requested that Oppenheimer produce documents and information. The regulators are reportedly focusing on both valuation and marketing of the fund. (“U.S. Probes Fund Operated by Oppenheimer,” Wall Street Journal).

Oppenheimer reported the investigation in its Form 10-K filed on March 6, according to the article. The private equity fund (not identified in the article) was operated by Oppenheimer Holdings Inc.

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