This is why the definition of beneficial ownership for Code of Ethics reporting includes members of the immediate family sharing the same household. Also, we question the wisdom of implicating your unknowing spouse in an insider trading scheme.
OUR TAKE: Private equity firms could avoid these problems by only charging management fees (and carry) and end this practice of charging the fund for out-of-pocket expenses. Any expense reimbursement issues would be the private matter between the firm and its employees.
OUR TAKE: The SEC will hold individuals liable for securities law violations they cause especially where they intentionally seek to evade compliance efforts by lying to their employers. It is unclear at this point whether his employer will also suffer an action for failing to detect his unlawful trading.
OUR TAKE: Code of Ethics violations are an oft-cited SEC deficiency and should be remedied upon discovery (see Common OCIE Deficiencies). However, this firm compounded the problem by boasting about its Code of Ethics compliance in marketing materials. We do not recommend claiming 100% compliance with any rule as part of a marketing campaign.