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Private real estate adviser overcharged funds, SEC says

Rialto Capital Management acted "promptly" to address fee problems in its private funds, the SEC says, and it may have saved the adviser a lot of trouble.

A Miami private fund adviser has been censured and will pay $350,000 in fines to settle US Securities and Exchange Commission claims that it overcharged the real estate funds it advised to the tune of $3 million in fees, sister title Regulatory Complaince Watch reported.

Rialto Capital Management was also accused of failing to disclose that it hadn’t checked the math behind Rialto’s claims that its in-house services were “at or below market rates” for five years, that it hid rising overhead costs driven by those services and that it didn’t have the proper policies and procedures to keep these sorts of things from happening.

Things might have gone worse for Rialto, the Commission said, but the firm moved “promptly” to fix the fee problems when they were discovered.

Read the Commission’s complaint below.