Lincolnshire Management Feels the

Heat

By Evan Vitale

T.J. Maloney and the private equity firm he controls, Lincolnshire

Management, are under scrutiny once again.

The last time one may have heard about Lincolnshire was in 2011

when they ran into some trouble after gaining $99 million in a

lawsuit.

Trouble is not something you expect when you have a

courthouse win of that size and to add to the surprise of the

predicament, it arrived from an unexpected source to boot.

Lincolnshire’s investors themselves filed a suit against the private equity firm arguing

that they were not given their fair share of the legal gains.

That case seems to have been more bark than bite, however, as the case remains pending to this

day.

This time around, the Securities and Exchange Commission is the

one bringing the suit and they have managed to do more than just bark.

In fact, Lincolnshire has agreed to pay 2.3 million

dollars to settle with the SEC.

The charges stated that Lincolnshire had improperly

allocated expenses between two funds that it controlled.

Both of these funds were acting as owners in what, in the eyes of the

SEC, was the same company.

Lincolnshire, for one reason or another, decided that it would

exchange resources between these two companies as if they were the same. For example, one company, Peripheral Computer Support paid

the entire payroll and 401(k) administrative expenses for

employees of both companies.

Now, this would not be an issue if both companies decided to do this to their mutual benefit. The issue arises when one company clearly

suffers while the other profits from such a relationship.

Because the SEC could prove that Computer Technology Solutions - the

name of the other company - was benefiting and Peripheral Computer Support was suffering, or perhaps because Lincolnshire did not want

the SEC to look any deeper, Lincolnshire agreed to pay the

damages and settle the dispute.

Hopefully, Lincolnshire doesn’t have any more run-ins with the

law for a few years, their reputation could use a break.

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