Leon Black of Apollo Global Management.
A couple of years ago Donald Trump was discussing his business practices with George Stephanopoulis.
“Excuse me,” he said. “I never went bankrupt. And let me just tell you: If you look at our great businesspeople today”—he mentioned the leveraged-buyout kings and investors Carl Icahn, Henry Kravis, and Leon Black, and said he could name 25 others—“all of them have done the same. They use, and we use, the laws of this country, the bankruptcy laws, because we’ll buy a company. We’ll have the company, we’ll throw it into a chapter, we’ll negotiate with the banks, we’ll make a fantastic deal. We’ll use those [laws]. But [the bankruptcy filings] were never personal. This is nothing personal. You know, it’s like on The Apprentice. It’s not personal. It’s just business. Okay?”
Donald mentioned Leon Black for good reason.
Black is the private equity billionaire who runs Apollo Global Management.
Last August Black was fined $53 million for charging investors phony fees.
“A common theme in our recent enforcement actions against private equity firms is their failure to properly disclose fees and conflicts of interest to fund investors,” said Andrew J. Ceresney, Director of the SEC Enforcement Division. “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.”
According to the SEC’s order instituting the settled administrative proceeding, Apollo’s supervisory failures pertain to a then-senior partner at the firm who was twice caught improperly charging personal items and services to Apollo-advised funds and their portfolio companies. Other than verbally reprimanding the partner and requiring repayment of improperly submitted expenses, Apollo took no further remedial or disciplinary steps on either occasion. 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.
“Apollo failed to take appropriate action to protect its clients upon first learning that a partner was improperly expensing personal items and services to the funds, and its failure resulted in repeated misconduct,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.
Leon Black’s Apollo Global is heavy in public pension clients including Illinois’ Teacher Retirement System.
Illinois Teachers’ Retirement System, Springfield, committed $1 billion total to five managers and allocated an additional $450 million total to four existing managers, confirmed spokesman David Urbanek. The $42.8 billion pension fund committed $500 million to Apollo Global Management to run special situation separate accounts in private equity and fixed income, $250 million each. Apollo currently manages $369 million for TRS.