February 7, 2017

Private equity adviser Scott M. Landress will pay $1.25 million and has agreed to be permanently barred from the securities industry to settle charges that he improperly withdrew fees from two private equity funds he managed.  The SEC’s order finds that Landress formed the funds to invest in real estate with underlying investments in properties throughout the UK.  His investment advisory firm SLRA Inc. earned management fees based on the net asset value of the underlying investments.  SLRA’s fees shrank and its management costs increased as real estate property values fell during the financial crisis.  The funds’ limited partners declined several requests by Landress for additional compensation to cover the shortfall.  According to the SEC’s order, in 2014, Landress directed SLRA to withdraw 16.25 million pounds from the funds, purportedly as payment for several years of services provided by an affiliate.  SLRA and Landress did not disclose the related-party transaction and the resulting conflict of interest until after the money had been withdrawn.  According to the SEC’s order, Landress and SLRA returned the withdrawn service fees to the funds after the SEC began its investigation.  SEC

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