BlackRock’s Steenberg: Regulation a big concern

Steenberg, speaking as part of a roundtable of BlackRock executives, said one of his biggest concerns are arbitrary rules set by the government, sister website peHUB reported.

“What you have, unfortunately, is a lot of folks with preconceived notions that are not based on fact and reality that ultimately can make government policy,” Steenberg said. He referred specifically to the 2010 Dodd Frank financial reform law and regulations in Europe affecting the private equity industry (perhaps a reference to the Alternative Investment Fund Managers Directive.)

These rules can have the effect of changing market opportunities. Steenberg mentioned healthcare investment opportunities in the United States, which are “incredible,” except for regulatory uncertainty.

On the sidelines of the conference, Steenberg said he doesn’t quite know what to make of the intense scrutiny the U.S. Securities and Exchange Commission is directing toward private equity. Steenberg said he is taking a wait-and-see approach on how this increased focus will affect the industry.

The SEC is organizing a unit to examine private equity and hedge funds and is seeking to hire 316 employees for its examination program, which currently has 450 examiners, accountants and lawyers in 12 offices, according to Reuters. Meanwhile, the SEC has found more than half of 400 private equity firms it has examined have inflated fees and expenses charged to portfolio companies, according to Bloomberg.

However, Steenberg said in his private equity career, which dates back to 1983, he has not seen any kind of abuse around fees by general partners.

Chris Witkowsky is editor of peHUB.