On June 29, 2015, the SEC announced that it "charged Kohlberg Kravis Roberts & Co. (KKR) with misallocating more than $17 million in so-called 'broken deal' expenses to its flagship private equity funds in breach of its fiduciary duty."

On June 29, 2015, the SEC instituted settled cease-and-desist proceedings against Kohlberg Kravis Roberts & Co. L.P. According to the SEC: "During the relevant period of 2006 to 2011, the KKR 2006 Fund L.P. (the '2006 Fund') was KKR's largest private equity fund with $17.6 billion in committed capital.... The 2006 Fund invested over $16.5 billion during the period primarily in opportunities in North America. Over the same period, KKR incurred $338 million in diligence expenses related to unsuccessful buyout opportunities and other similar types of expenses ('broken deal expenses'). Under the 2006 Fund limited partnership agreement (the 'LPA'), KKR was permitted to allocate to the 2006 Fund, or be reimbursed by it for, "all" broken deal expenses that were "incurred by or on behalf of" the 2006 Fund. During the period, KKR allocated broken deal expenses based on the geographic region of the potential deal. Accordingly, KKR allocated broken deal expenses related to North American opportunities to the 2006 Fund. Pursuant to fee sharing arrangements with its Flagship PE Funds during the period, KKR typically bore 20% of all broken deal expenses. However, KKR did not allocate broken deal expenses to KKR co-investors from 2006 to 2011 except for a partial allocation to certain co-investors in 2011. Nor did KKR expressly disclose in the LPA or related offering materials that it did not allocate broken deal expenses to KKR co-investors, as described below, even though these co-investors participated in and benefited from KKR's sourcing of private equity transactions. As a result of the absence of such disclosure, KKR misallocated $17.4 million in broken deal expenses between its Flagship PE Funds and KKR co-investors during the relevant period, and, thus, breached its fiduciary duty. KKR also did not adopt and implement a written compliance policy or procedure governing its fund expense allocation practices until 2011."