KKR & Co. Inc. Rotten Score Breakdown

The SEC charged Kohlberg Kravis Roberts & Co. in June 2015 with misallocating more than $17 million in broken-deal expenses to its flagship private-equity funds in breach of its fiduciary duty. The SEC found that during a six-year period ending in 2011, KKR incurred approximately $338 million in expenses related to unsuccessful buyout opportunities. Although co-investors, including KKR executives and affiliated vehicles, participated in successful investments and benefited from KKR's deal-sourcing work, KKR for years allocated none of the broken-deal expenses to those co-investors. The SEC also found that KKR did not expressly disclose this allocation practice in its fund agreements or offering materials and lacked an adequate written compliance policy governing expense allocation until the end of the period. KKR agreed to pay nearly $30 million, including more than $14 million in disgorgement, more than $4.5 million in prejudgment interest and a $10 million penalty. Primary source: SEC — SEC Charges KKR With Misallocating Broken Deal Expenses: https://www.sec.gov/newsroom/press-releases/2015-131