WASHINGTON (Legal Newsline) — The U.S. Equal Employment Opportunity Commission (EEOC) announced Feb. 7 that Scott M. Landress, a private equity adviser, has been barred from the securities industry and will need to pay $1.25 million in penalties after allegedly withdrawing improper fees from two private equity funds he managed.
Landress purportedly formed the funds to invest in real estate trusts in the United Kingdom. Landress’ investment advisory firm earned management fees related to the net asset value of the underling investments of these properties.
When the 2007-08 financial crisis happened, SLRA was unable to earn the same management fees, and management costs increased. To cover his losses, Landress allegedly withdrew $20.32 million from the funds. He said it was payment for several years of service provided by an affiliate.
“Private equity fund advisers have a duty to act in the best interest of their clients, but Landress and SLRA helped themselves to millions of dollars’ worth of fees to which they had no legitimate claim,” said Scott W. Friestad, associate director of the SEC’s Division of Enforcement.
The case was handled for the SEC by David Becker, Gregory Padgett, Robert Dodge and Brian Fitzpatrick, and was supervised by Amy Friedman and Jeffrey Finnell.