SEC Discounts Fine for PEU First Reserve

In May 2016 PEHub reported:

First Reserve agreed to reimburse its investors $12.7 million and pay a $5 million fine to settle a Securities and Exchange Commission investigation  into various fee and expense practices.

By September the amount reimbursed investors fell to $8.3 million and the fine dropped to $3.5 million.  Why the $5.9 million difference?  Only the SEC knows.

First Reserve is an energy focused private equity underwriter (PEU) established in 1983.  Cofounders William Macaulay and John Hill came from Wall Street and the U.S. Government, Office of Management and Budget and Federal Energy Administration.  The pair spoke with Oil and Gas Financial Journal in 2013.  The article stated:

First Reserve and its active controlled companies have invested over $5 billion of equity in platform investments and add-on acquisitions and mergers in 2012.

Ouch.  That $5 billion went to work when oil prices were over $100/barrel.

WSJ ran a piece last summer on First Reserve's struggles with declining energy prices. 

WSJ identified difficulties with two First Reserve affiliates, CHC Group and Midstates Petroleum.  In February 2016 Moody's downgraded the debt of affiliate AFGlobal.  That report stated:

Given the highly levered capital structure, with around $800 million in reported debt, and the significantly lower earnings base, Moody's is concerned about the sustainability of the company's capital structure.

The SEC settlement cited First Reserves cooperation as a factor in fine setting.  It would not surprise me if ability to pay was another.  Former DOJ Chief Eric Holder went out of his way to ensure government fines wouldn't contribute to systemic risk.  I wonder if the SEC adopted a similar frame for First Reserve. 

ZeroHedge took a slightly different stand on the SEC in its piece today on former HFT enforcer Greg Berman landing at  HFT powerhouse Citadel:

And just like that all is well again in the corrupt world, in which the market "regulators" pretends to protect the little guy, when in reality all they only cater to the most criminal with the simple hope of landing a job there one day and getting paid in 1 year what they make in 10 at the SEC or any other government agency.  

Might a reward wait SEC staffers who gave First Reserve a $1.5 million discount?