New York-based private equity firm Prime Group Holdings agreed to pay $20.6 million as part of a settlement with the Securities and Exchange Commission (SEC) resolving allegations it failed to adequately disclose it paid millions of dollars in fees to a real estate brokerage firm owned by its founder and chief executive officer.

Prime Group was fined $6.5 million and will pay approximately $11.5 million in disgorgement and $2.6 million in prejudgment interest, the SEC announced Tuesday in a press release. The firm is not registered with the SEC.

The details: From 2017-21, Prime Group, through an investment fund to purchase self-storage real estate properties, paid real estate brokerage fees to an affiliated real estate brokerage firm wholly owned by its CEO, according to the SEC’s order. During the period, the brokerage firm allegedly received nearly $18 million in fees used to fund sourcing operations and compensate the members of deal teams comprised of Prime Group employees and independent contractors.

The SEC found these payments made the brokerage firm an affiliate of Prime Group; thus, Prime Group made misleading statements in the fund’s offering materials concerning fees and conflicts of interest by not disclosing its affiliate relationship with the brokerage firm.

“Funds, including those that invest in alternative asset classes, must ensure that their offering materials contain clear, accurate, and adequate disclosures,” said Osman Nawaz, chief of the SEC’s Enforcement Division’s Complex Financial Instruments Unit, in the release. “In particular, information related to payments made to affiliates, and the potential conflicts of interest embedded in such arrangements, is critical to investors’ decisions.”

A representative for Prime Group did not respond to a request for comment. The firm neither admitted nor denied the SEC’s findings.