SEC Charges Buyout Firm TZP Group For Excessive Management Fees

Regulators Fine Private-Equity Firm TZP Over Excess Fees

U.S. regulators penalized TZP Group, a buyout firm that backs lower midmarket companies, for charging investors excessive management fees without proper disclosure.

On Friday, the Securities and Exchange Commission said TZP would settle the allegations by paying a $175,000 penalty and returning about $509,000 in improperly collected fees and interest to investors. […]

TZP’s alleged violations were related to how it calculated management-fee offsets for some investments held in nine funds between 2018 and 2023. TZP’s improper calculations created undisclosed conflicts of interest, and the firm failed to adhere to its contracts with fund investors, the SEC said.

On several occasions TZP deferred collecting certain fees from portfolio companies, then charged the companies 8% interest on the deferred sums. The firm didn’t adequately disclose these interest payments to investors or reimburse them through fee offsets, in violation of its investor contracts, the SEC said. The regulator also alleged that TZP duplicated certain fees in its calculations, as a result giving investors lower fee offsets than it should have.