UPS can only look on with wonder at Goldman Sachs. On Friday, the US Securities and Exchange Commission announced it had fined the shipping company $45mn for improperly carrying an acquired company at a value hundreds of millions of dollars above what management knew it was worth. As such, the audited financial statements that its public shareholders rely on were deemed inaccurate and misleading. The rules are different in private equity.
Supposedly “accredited” wealthy investors and institutions that participate in illiquid private markets only really know how their funds performed when — years later — it is time for them to get their cash back. UPS had acquired a freight business called Overnite Corp in 2005 which it had since been carrying at $1.4bn. However, according to the SEC in its complaint, internal analysis done by UPS in 2019 and 2020 suggested that the freight unit was worth much less than $1bn.