Securities Regulation Daily Wrap Up, INVESTMENT ADVISERS—SEC says investment adviser overcharged private fund clients, breaching its fiduciary duties, (Aug 18, 2025)

By Suzanne Cosgrove

The adviser, TZP Management Associates, has agreed to pay more than $680,000 in monetary relief and conduct a distribution to harmed investors, to settle the charges.

The SEC has charged TZP Management Associates, LLC (TZP), a New York-based registered investment adviser, with breaching its fiduciary duty regarding management fee calculation practices for private fund clients related to the compensation TZP received from portfolio companies.

TZP advises private funds that invest in lower-middle market companies that provide technology services, business services and consumer products in the U. S. and Canada.

According to the SEC’s order, under each fund’s limited partnership agreement (collectively, the LPAs), TZP is entitled to management fees. Each LPA states that TZP also may receive transaction fees—defined to include all transaction, advisory and monitoring fees, among other fees—from portfolio companies, but requires that TZP credit back to each fund a portion of the transaction fees to reduce or offset the management fees the fund owes to TZP.

Disclosure failures, miscalculations. From October 2018 through November 2023, the SEC said, TZP engaged in two fee offset calculation practices related to its receipt of transaction fees that created conflicts of interest that were not adequately disclosed to the funds or their limited partners (LPs) and were inconsistent with the relevant LPAs.

First, the order found that TZP failed to adequately disclose that it received interest on deferred transaction fees from five portfolio company investments and did not include those amounts in the corresponding fee offsets. Second, the order found that, for at least one portfolio company investment in which multiple funds invested, TZP improperly duplicated transaction fee reductions when calculating certain fee offsets.

Overcharges add up. TZP charged the funds more than $500,000 in excess management fees because of these practices, according to the order.

TZP consented to the entry of the SEC’s order finding that it violated Section 206(2) of the Investment Advisers Act of 1940. In addition to a cease-and-desist order and censure, TZP agreed to pay $508,877 in disgorgement and prejudgment interest and a $175,000 civil penalty and was ordered to conduct a distribution to harmed LPs.

File No. 3-22511.

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