Hamilton Lane CCO: Scrutiny builds LP trust

Increased Securities and Exchange Commission oversight of the private equity industry has increased LP confidence in the asset class, Hamilton Lane’s new chief compliance officer told pfm.

“[The SEC] is more technically adept, and has staffed up with private equity experts so is now much more conversant in their exams. A lot of their focus has been disclosure on conflicts of interest, fees, performance advertising and disclosure of methodology to LPs. I think that’s good for private equity because it helps build LP confidence in GPs,” Frederick Shaw told pfm.

Hamilton Lane’s compliance outlook for the year is broadly in line with what the SEC have highlighted in its exam priorities, Shaw said.

“[One] major area of focus for us [is] cybersecurity – we’re always monitoring to make sure we have the appropriate policies, controls and auditing features in place. We’ve had a focus on it since before the SEC’s 2014 guidelines, and have been externally and internally testing our procedures,” said Shaw.

Fees and expenses are also on the firm’s radar, Shaw said, and in particular making sure the fees and expenses the firm incurs are ascribed to the proper entity, are appropriately disclosed to investors and that the managers are charging fees and expenses as permitted.
Shaw was promoted to chief compliance officer earlier this month, having been director of compliance since he joined Hamilton Lane in 2011. Prior to this he was CCO at Natsource, an asset management services provider.

At the same time Lydia Gavalis was promoted to general counsel having been deputy since August. She is replacing Robert Cleveland, who spent 16 years in the role.