The US Securities and Exchange Commission (SEC) has named its second co-chief of asset management enforcement, replacing the leader who recently became Blackstone’s head of compliance.
Attorney Catherine Dabney O’Riordan joins Anthony Kelly as head of the unit overseeing private and public investment firms, advisors, and examinations.
O’Riordan supervised the SEC’s first action against a private equity manager for misallocating expenses between the firm and private fund. Arizona-based Clean Energy Capital had allegedly lent their own funds millions at unfavorable interest rates after the investment vehicles ran out of cash.
The SEC’s Los Angeles asset management team—led by O’Riordan—charged Clean Energy Capital and its leader with antifraud, disclosure, and custody violations, among others.
Enforcement Director Andrew Ceresney praised O’Riordan’s “excellent judgment, deep knowledge of the laws and rules governing the asset management industry, and strong leadership skills.”
The two co-chiefs “will be great partners in the unit’s mission and the SEC’s efforts to root out misconduct in the asset management industry,” he continued.
O’Riordan’s strong track record of investigating alternatives firms’ fee practices suggested the SEC will continue focusing on that facet of asset management.
“We have the expertise and will continue to aggressively bring impactful cases in this space,” Ceresney said in a speech last month. Even experienced investors can and have been defrauded by alternatives fees, he continued.
“There is thus little question that private equity is an appropriate focus for the SEC.”