Alumni Ventures Group is the latest firm to feel the force of the US Securities and Exchange Commission as the financial regulator seeks to bring about the biggest changes to private markets for decades.

The SEC went after the New Hampshire-based venture firm for allegedly misleading investors about its management fees and improperly transferring millions of dollars between funds.

At issue was the firm’s “industry standard ‘2 and 20’” model. Its typical practice was to charge 20 ­percent upfront – 10 years’ worth of the annual fee – rather than 2 percent on a yearly basis, as is the industry standard.  The firm continued to use its misleading “industry standard” language – which the SEC essentially calls an interest-free loan – until February 2020, the regulator said.

The SEC’s order last Friday comes on the heels of its proposed rules for private fund sponsors – including a 341-page opus that is still being digested by industry participants, yet widely expected to significantly alter how private equity firms operate.

While the proposed rules represent a more aggressive phase of regulating private equity funds, the scope and focus of enforcement will depend on their final form. The SEC believes the proposals will enhance the capital raising process and provide investors apples to apples comparisons when assessing and making investment decisions on funds. There is doubt in the industry, however, that the final rules will have this result. The proposals are subject to public comment and may or may not be enacted in the near-term. And some in the industry expect the agency to issue a watered-down proposal by the end of 2023.

The disclosure of fees and expenses and conflicts is a recurring focus area for the financial watchdog. While Alumni Ventures appears to be an unusual case in how it charges fees, it isn’t the only one to have been found lacking in disclosure. In the past, firms including Blackstone, TPG and Monomoy Capital Partners have been involved in dust-ups with the SEC over undisclosed charges and accelerated monitoring fees.

Alumni Ventures has made a point of opening access past the institutional investor set: it makes it “easy and simple” for individuals to invest in its portfolio and receives capital mainly from individual investors – predominantly Ivy League alumni – who can invest in a portfolio of start-ups connected to fellow grads for as little as $25,000, according to its website.

Private equity is striving to become more mainstream and stands to benefit from more individual investors gaining access to the asset class. Greater regulatory scrutiny is an inevitable part of this journey.