Four fund advisers affiliated with private equity firm Apollo Global Management are accused by the Securities and Exchange Commission of failing to properly disclose fees and conflicts of interest to fund investors, according to an announcement Tuesday.

According to an SEC order instituting a settled administrative proceeding, the Apollo fund advisers misled investors about accelerated monitoring fees and a loan agreement. In addition, Apollo failed to supervise a senior partner who charged personal expenses to the funds.

An SEC investigation found that the Apollo advisers failed to adequately disclose the benefits they received by accelerating the payment of future monitoring fees owed by the funds’ portfolio companies upon the sale or initial public offering of those companies. The lump sum payments received by the Apollo advisers essentially reduced the portfolio companies’ value prior to their sale or IPO and reduced amounts available for distribution to the fund’s limited partners, the SEC said.

In addition, the SEC also found that one of the Apollo advisers failed to disclose certain information about interest payments made on a loan between the adviser’s affiliated general partner and five funds. The loan agreement obligated the general partner to pay interest to the funds during the course of the loan, and the funds’ financial statements disclosed that interest was accruing as an asset of the funds. But that interest was instead ultimately allocated solely to the general partner, which made the disclosures in the financial statements misleading, the SEC said.

Andrew J. Ceresney, director of the SEC enforcement division, said, improper disclosure and conflicts of interest were a common theme in SEC enforcement actions against private equity.

“Investors in Apollo funds were not adequately informed about accelerated monitoring fees and separately allocated loan interest, and therefore were unable to gauge their impact on their investments,” he said.

Apollo Global Management issued a statement in response to the consent decree.

“Apollo seeks to act appropriately and in the best interest of the funds it manages at all times,” the company said. “Long before the SEC inquiry began, Apollo had enhanced its disclosure and compliance relating to these matters, reflecting the firm’s commitment to uphold the highest standards of governance and transparency as it focuses on delivering exceptional value to its fund investors.”

Todd Cipperman, founding principal of Cipperman Compliance Services, says the private equity industry is clearly a target for SEC inspection and enforcement now, given that the commission has brought actions against KKR, Blackstone, Guggenheim, and now Apollo.

“This type of case should not come as a surprise to the private equity private industry,” says Cipperman. “The SEC has previously questioned the acceleration of portfolio monitoring fees (see Blackstone) and has addressed insider transactions and undisclosed fees in many speeches and public statements. Firms that have not begun to act on these warnings need to change their behavior. We expect an acceleration of cases against firms in both the private equity and hedge fund industries now that the bellwether firms have been prosecuted. No firm can say that it was singled out unfairly.”

The supervisory failure at Apollo involved a senior partner at the firm who was twice caught improperly charging personal items and services to Apollo-advised funds and their portfolio companies from 2010 to 2013.

“Other than verbally reprimanding the partner and requiring repayment of improperly submitted expenses, Apollo took no further remedial or disciplinary steps on either occasion,” according to the SEC order. “A firm-wide expense review eventually revealed even more personal expenses the partner improperly charged to fund clients, and this led to the partner’s separation from the firm.”

According to a statement by Apollo, the firm itself “discovered and remediated the expense account misconduct committed by a partner several years ago as part of a periodic compliance review of expenses. The executive agreed to a formal separation agreement with the firm after repaying all of the personal expenses he improperly charged as well as the cost of the internal review conducted by Apollo. Apollo reimbursed its funds for any improper expenses, voluntarily reported the matter to the SEC, and cooperated fully with the agency’s review.”

Apollo agreed to a $52.7 settlement as part of the consent decree. It agreed to cease and desist from further violations, and must pay $37.52 million in disgorgement, $2.7 million in interest, and a $12.5 million penalty. Apollo agreed to distribute the disgorgement and interest amounts to affected fund investors, the SEC said.

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