In re Blackstone Alternative

 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6812 / January 13, 2025 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22399 
  
 
In the Matter of 
 
Blackstone Alternative 
Credit Advisors LP, 
Blackstone Management 
Partners L.L.C., and 
Blackstone Real Estate 
Advisors L.P., 
 
Respondents. 
 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 203(e) AND 203(k) OF THE 
INVESTMENT ADVISERS ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
 
 
I. Introduct ion 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Blackstone Alternative Credit Advisors LP (“Blackstone Alternative 
Credit Advisors”), Blackstone Management Partners L.L.C. (“Blackstone Management 
Partners”), and Blackstone Real Estate Advisors L.P. (“Blackstone Real Estate Advisors”) 
(collectively the “Blackstone Advisers” or “Respondents”). 
 
II. Consent 
 In anticipation of the institution of these proceedings, Respondents have submitted Offers 
of Settlement (“Offers”) that the Commission has determined to accept.  Respondents admit the 
facts set forth in Section III below, acknowledge that their conduct violated the federal securities 
laws, admit the Commission’s jurisdiction over them and the subject matter of these proceedings, 
and consent to the entry of this Order Instituting Administrative and Cease-and-Desist 
Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, 
Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below.   
 

 
 
III. Facts 
 On the basis of this Order and Respondents’ Offers, the Commission finds
1
 that 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on registered 
investment advisers to ensure that they responsibly discharge their crucial role in our markets.  
The Commission has long said that compliance with these requirements is essential to investor 
protection and the Commission’s efforts to further its mandate of protecting investors, 
maintaining fair, orderly, and efficient markets, and facilitating capital formation. 
2. These proceedings arise out of the failure of Respondents’ personnel, including at 
senior levels, to adhere to certain of these essential requirements and Respondents’ policies and 
procedures.  Using their personal and/or firm-issued devices (“Mobile Devices”), these personnel 
communicated both internally and externally by text messages and/or other unapproved written 
communications platforms (“off-channel communications”). 
3. Specifically, from at least December 2019 (the “Relevant Period”), personnel at 
the Blackstone Advisers sent and received off-channel communications that, among other things, 
related to recommendations made or proposed to be made and advice given or proposed to be 
given in Respondents’ advisory businesses.  Respondents did not maintain or preserve the 
substantial majority of these written communications.  These recordkeeping failures were firm-
wide and involved personnel at various levels of authority.  As a result, the Blackstone Advisers 
violated Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder. 
4. Respondents’ failure to implement procedures reasonably expected to prevent 
such communications led to their failure to reasonably supervise their personnel within the 
meaning of Section 203(e)(6) of the Advisers Act.  
5. During the Relevant Period, Blackstone Inc. and its investment adviser affiliates 
received and responded to Commission subpoenas for documents and records requests in 
Commission investigations.  The recordkeeping failures of Respondents and their investment 
adviser affiliates may have impacted the Commission’s ability to carry out its regulatory 
functions and investigate violations of the federal securities laws.   
6. The Commission staff found Respondents’ recordkeeping failures after 
commencing a risk-based initiative to investigate the use of off-channel and unpreserved 
communications at registered investment advisers.  Prior to being approached by the 
Commission staff, the Blackstone Advisers initiated a review of their recordkeeping failures and 
began a program of remediation.   
                                                 
1
  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  
 

 
 
Respondents 
7. Blackstone Alternative Credit Advisors is a Delaware limited partnership, with its 
principal  office  in  New  York,  New  York,  that  has  been  registered  with  the  Commission  as  an 
investment adviser since 2006.  Blackstone Inc., a Delaware corporation, with its principal office in 
New York, New York, is the parent of Blackstone Alternative Credit Advisors.  
8. Blackstone Management Partners is a Delaware limited liability company, with its 
principal  office  in  New  York,  New  York,  that  has  been  registered  with  the  Commission  as  an 
investment adviser since 2005.  Blackstone Inc. is the parent of Blackstone Management Partners.  
9. Blackstone  Real  Estate  Advisors  is  a  Delaware  limited  partnership,  with  its 
principal  office  in  New  York,  New  York,  that  has  been  registered  with  the  Commission  as  an 
investment adviser since 2007.  Blackstone Inc. is the parent of Blackstone Real Estate Advisors. 
Recordkeeping Requirements Under the Advisers Act 
10. Section 204 of the Advisers Act authorizes the Commission to issue rules 
requiring investment advisers to make and keep for prescribed periods, and furnish copies of, 
such records as necessary or appropriate in the public interest or for the protection of investors. 
11. The Commission adopted Rule 204-2 pursuant to this authority.  This rule 
specifies the manner and length of time that the records made in accordance with Commission 
rules, and certain other records made by investment advisers, must be maintained and produced 
promptly to Commission representatives. 
12. The rules adopted under Section 204 of the Advisers Act, including Advisers Act 
Rule 204-2(a)(7), require that investment advisers preserve for at least five years in an easily 
accessible place, the first two years in an appropriate office of the investment adviser, originals of 
all communications received and copies of all written communications sent relating to, among 
other things:  (a) any recommendation made or proposed to be made and any advice given or 
proposed to be given; (b) any receipt, disbursement or delivery of funds or securities; (c) the 
placing or execution of any order to purchase or sell any security; or (d) predecessor performance 
and the performance or rate of return of any or all managed accounts, portfolios, or securities 
recommendations. 
Respondents’ Policies and Procedures 
13. All Blackstone Inc. affiliated advisers, including Respondents, adopted compliance 
policies and procedures, including policies and procedures designed to ensure the retention of 
business-related records, including electronic communications, in compliance with the relevant 
recordkeeping provisions.   
14. Since at least 2011, personnel of all Blackstone Inc. affiliated advisers, including 
Respondents, were repeatedly advised that the use of unapproved electronic communications 
methods, including on Mobile Devices, was not permitted, and that they should not use personal 
email, chats or text messaging applications for business purposes.  All Blackstone Inc. affiliated 

 
 
advisers, including Respondents, implemented and conducted a surveillance program on 
electronic communications sent or received on approved platforms.  
15. Messages sent through firm-approved communications methods were monitored, 
subject to review, and archived.  Messages sent through unapproved communications methods, 
such as unapproved applications on Mobile Devices, were not monitored, subject to review or 
archived, unless they were identified and captured through other means, such as surveillance of 
firm-approved communications methods.  
16. Personnel of all Blackstone Inc. affiliated advisers, including Respondents’ 
personnel, received training, which was designed to address the Blackstone Inc. affiliated advisers’ 
supervision of their personnel and adherence to their books and recordkeeping requirements.  The 
policies and related trainings instructed personnel that electronic communications on approved 
platforms were subject to surveillance.  All Blackstone Inc. affiliated advisers, including 
Respondents, also had implemented procedures for all personnel requiring annual self-attestations 
of compliance.  
17. The Blackstone Advisers failed to implement systems reasonably expected to 
determine whether personnel were following the policies and procedures regarding electronic 
communications.  While permitting personnel to use approved communications methods on 
Mobile Devices for business communications, the Blackstone Advisers failed to implement 
sufficient monitoring to ensure that their recordkeeping and communications policies were being 
followed.   
Respondents’ Recordkeeping Failures 
18. In October 2022, the Commission staff commenced a risk-based initiative to 
investigate whether investment advisers were properly maintaining communications that they 
were required to preserve as records under the Advisers Act.  The Blackstone Advisers 
cooperated with the investigation by proactively gathering and reviewing communications from 
the Mobile Devices of certain of their personnel and responding to the staff’s requests for 
additional information.  The Blackstone Advisers also produced, at the request of the 
Commission staff, off-channel communications of a subset of these personnel relating to their 
investment advisory businesses.  These personnel included senior leadership such as managing 
directors and senior managing directors. 
19. The Commission staff’s investigation found off-channel communications by 
Blackstone Adviser personnel, including senior personnel.  All of the personnel whose 
communications were reviewed in the course of the investigation had sent or received multiple 
off-channel communications that were records required to be preserved by the Blackstone 
Advisers under the Advisers Act.  These off-channel communications were sent among 
colleagues as well as to external market participants.  
20. During the Relevant Period, personnel at the Blackstone Advisers sent and 
received off-channel text messages subject to the recordkeeping requirements of Advisers Act 
Rule 204-2.  

 
 
21. These off-channel communications included records required to be preserved 
under the Advisers Act because they related to a recommendation made or proposed to be made 
or advice given or proposed to be given.  For example, a Blackstone Alternative Credit Advisors 
senior managing director exchanged messages with multiple colleagues on an unapproved 
platform concerning proposed investment advice for a client.  Similarly, a Blackstone 
Management Partners senior managing director exchanged messages with a colleague on an 
unapproved platform concerning proposed investment advice for a client.  Additionally, a 
Blackstone Real Estate Advisors senior managing director exchanged messages with multiple 
colleagues on an unapproved platform concerning investment advice for a client. 
22. In addition, the investigation found off-channel communications that were records 
required to be preserved under the Advisers Act because they related to the placing or execution 
of orders to purchase or sell securities.  For example, a Blackstone Alternative Credit Advisors 
senior managing director exchanged multiple text messages with colleagues on an unapproved 
platform concerning placing securities trades for a client.  As another example, a Blackstone Real 
Estate Advisors managing director sent and received numerous written updates with multiple 
colleagues on an unapproved platform concerning placing trades for a client. 
Respondents’ Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
23. During the Relevant Period, Blackstone Inc. and its investment adviser affiliates, 
received and responded to Commission subpoenas for documents and records requests in 
Commission investigations.  By failing to maintain and preserve required records relating to their 
investment advisory businesses, Respondents and their investment adviser affiliates may have 
deprived the Commission of these off-channel communications in investigations. 
Respondents’ Violations and Failure to Supervise 
24. As a result of the conduct described above, the Blackstone Advisers willfully
2
 
violated Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder. 
25. As a result of the conduct described above, the Blackstone Advisers failed 
reasonably to supervise their personnel, with a view to preventing or detecting certain of their 
supervised persons’ aiding and abetting violations of Section 204 of the Advisers Act and Rule 
204-2(a)(7) thereunder, within the meaning of Section 203(e)(6) of the Advisers Act. 
Respondents’ Efforts to Comply 
26. In determining to accept the Offers, the Commission considered steps undertaken 
by Blackstone Inc. affiliated advisers, including Respondents, prior to and promptly after being 
approached by the Commission staff to comply with their books and recordkeeping obligations, as 
well as their responsiveness to and cooperation afforded the Commission staff.  Prior to this 
                                                 
2
  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, 
“‘means no more than that the person charged with the duty knows what he is doing.’”  See 
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 
(D.C. Cir. 1949)). 

 
 
action, Blackstone Inc. enhanced its policies and procedures to which all Blackstone Inc. 
affiliated adviser personnel, including Respondents’ personnel, were subject concerning the use 
of approved communications methods, including on Mobile Devices.  During the Relevant 
Period, Blackstone Inc. also issued repeated reminders about its relevant policies to personnel 
firm-wide.   
Undertakings 
The Respondents have undertaken to: 
27. Internal Audit.  Within one hundred eighty (180) days of the entry of this Order, 
the Blackstone Advisers shall require that their Internal Audit function(s) initiate a separate 
audit(s), to be completed within three hundred and sixty-five (365) days of the entry of this Order, 
consisting of the following: 
a.  A comprehensive review of the Blackstone Advisers’ supervisory, compliance, 
and other policies and procedures designed to ensure that the Blackstone Advisers’ 
electronic communications, including those found on Mobile Devices, are preserved in 
accordance with the requirements of the federal securities laws.  This review should 
include, but not be limited to, a review of the Blackstone Advisers’ policies and 
procedures to ascertain if they provide for any significant technology and/or behavioral 
restrictions that help prevent the risk of the use of unapproved communications methods 
on Mobile Devices in work conditions (e.g., traveling, site visits).   
 
b.  A comprehensive review of training conducted by the Blackstone Advisers 
designed to ensure personnel are complying with the requirements regarding the 
preservation of electronic communications, including those found on Mobile Devices, in 
accordance with the requirements of the federal securities laws, as well as a review of 
Blackstone Advisers’ requirement that their personnel certify in writing on a periodic 
basis that they are complying with preservation requirements.  
 
c.  An assessment of the surveillance program measures implemented by the 
Blackstone Advisers designed to ensure compliance, on an ongoing basis, with the 
requirements found in the federal securities laws to preserve electronic communications, 
including those found on Mobile Devices. 
 
d.  An assessment of the technological solutions that the Blackstone Advisers have 
begun implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that the Blackstone Advisers’ personnel 
will use the technological solutions going forward and a review of the measures 
employed by the Blackstone Advisers to track personnel usage of new technological 
solutions.  
 
e.  A comprehensive review of the framework adopted by the Blackstone Advisers 
to address instances of non-compliance by the Blackstone Advisers’ personnel with the 
Blackstone Advisers’ policies and procedures concerning the use of Mobile Devices to 
communicate about the Blackstone Advisers’ business.  This review shall include a 

 
 
survey of how the Blackstone Advisers determined which personnel failed to comply with 
the Blackstone Advisers’ policies and procedures, the corrective action carried out, an 
evaluation of who violated the policies and procedures and why, what penalties were 
imposed, and whether penalties were handed out consistently across business lines and 
seniority levels.   
 
28. Recordkeeping.  The Blackstone Advisers shall preserve any record of compliance 
with these undertakings, including any materials supporting the certification made pursuant to 
Paragraph 29, in an easily accessible place for a period of not less than five (5) years from the 
end of the fiscal year during which the last entry was made on such record, the first two (2) years 
in an appropriate office of the Blackstone Advisers.  
29. Certification.  The Blackstone Advisers shall certify, in writing, compliance with 
the undertakings set forth above.  The certification shall identify the undertakings and provide 
written evidence of compliance in the form of a narrative.  The Commission staff may make 
reasonable requests for further evidence of compliance, and Respondents agree to provide such 
evidence.  The certification shall be submitted to Thomas P. Smith, Jr., Associate Regional 
Director, Division of Enforcement, Securities and Exchange Commission, New York Regional 
Office, 100 Pearl Street, Suite 20-100, New York, NY 10004, or such other person as the 
Commission staff may request, with a copy to the Office of Chief Counsel of the Enforcement 
Division, no later than sixty (60) days from the date of the completion of the undertakings. 
 In determining whether to accept the Offers, the Commission has considered these 
undertakings. 
 
IV. Sanctions 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondents’ Offers. 
 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 
ORDERED that: 
 
A. Respondents cease and desist from committing or causing any violations and any 
future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 
B. Respondents are censured.  
C. Respondent Blackstone Alternative Credit Advisors shall, within fourteen (14) 
days of the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the 
Securities and Exchange Commission for transfer to the general fund of the United States 
Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 
interest shall accrue pursuant to 31 U.S.C. § 3717.   
D. Respondent Blackstone Management Partners shall, within fourteen (14) days of 
the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the Securities 
and Exchange Commission for transfer to the general fund of the United States Treasury, subject 

 
 
to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional interest shall 
accrue pursuant to 31 U.S.C. § 3717.   
E. Respondent Blackstone Real Estate Advisors shall, within fourteen (14) days of 
the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the Securities 
and Exchange Commission for transfer to the general fund of the United States Treasury, subject 
to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional interest shall 
accrue pursuant to 31 U.S.C. § 3717.   
 Payment must be made in one of the following ways:   
 
(1) Respondents may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondents may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondents may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying the 
Blackstone Advisers as the Respondents in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Thomas P. 
Smith, Jr., Associate Regional Director, Division of Enforcement, Securities and Exchange 
Commission, New York Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004.   
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondents agree that in any Related Investor 
Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction 
of any award of compensatory damages by the amount of any part of Respondents’ payment of a 
civil penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants 
such a Penalty Offset, Respondents agree that they shall, within thirty (30) days after entry of a 
final order granting the Penalty Offset, notify the Commission’s counsel in this action and pay 
the amount of the Penalty Offset to the Securities and Exchange Commission.  Such a payment 
shall not be deemed an additional civil penalty and shall not be deemed to change the amount of 
the civil penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor 
Action” means a private damages action brought against Respondents by or on behalf of one or 
more investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6812 / January 13, 2025 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22399 

  

 

In the Matter of 

 

Blackstone Alternative 

Credit Advisors LP, 

Blackstone Management 

Partners L.L.C., and 

Blackstone Real Estate 

Advisors L.P., 

 

Respondents. 

 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTIONS 203(e) AND 203(k) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER 

 

 

I. Introduct ion 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against Blackstone Alternative Credit Advisors LP (“Blackstone Alternative 

Credit Advisors”), Blackstone Management Partners L.L.C. (“Blackstone Management 

Partners”), and Blackstone Real Estate Advisors L.P. (“Blackstone Real Estate Advisors”) 

(collectively the “Blackstone Advisers” or “Respondents”). 

 

II. Consent 

 In anticipation of the institution of these proceedings, Respondents have submitted Offers 

of Settlement (“Offers”) that the Commission has determined to accept.  Respondents admit the 

facts set forth in Section III below, acknowledge that their conduct violated the federal securities 

laws, admit the Commission’s jurisdiction over them and the subject matter of these proceedings, 

and consent to the entry of this Order Instituting Administrative and Cease-and-Desist 

Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below.   

 



 

 

III. Facts 

 On the basis of this Order and Respondents’ Offers, the Commission finds1 that 

 

Summary 

1. The federal securities laws impose recordkeeping requirements on registered 

investment advisers to ensure that they responsibly discharge their crucial role in our markets.  

The Commission has long said that compliance with these requirements is essential to investor 

protection and the Commission’s efforts to further its mandate of protecting investors, 

maintaining fair, orderly, and efficient markets, and facilitating capital formation. 

2. These proceedings arise out of the failure of Respondents’ personnel, including at 

senior levels, to adhere to certain of these essential requirements and Respondents’ policies and 

procedures.  Using their personal and/or firm-issued devices (“Mobile Devices”), these personnel 

communicated both internally and externally by text messages and/or other unapproved written 

communications platforms (“off-channel communications”). 

3. Specifically, from at least December 2019 (the “Relevant Period”), personnel at 

the Blackstone Advisers sent and received off-channel communications that, among other things, 

related to recommendations made or proposed to be made and advice given or proposed to be 

given in Respondents’ advisory businesses.  Respondents did not maintain or preserve the 

substantial majority of these written communications.  These recordkeeping failures were firm-

wide and involved personnel at various levels of authority.  As a result, the Blackstone Advisers 

violated Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder. 

4. Respondents’ failure to implement procedures reasonably expected to prevent 

such communications led to their failure to reasonably supervise their personnel within the 

meaning of Section 203(e)(6) of the Advisers Act.  

5. During the Relevant Period, Blackstone Inc. and its investment adviser affiliates 

received and responded to Commission subpoenas for documents and records requests in 

Commission investigations.  The recordkeeping failures of Respondents and their investment 

adviser affiliates may have impacted the Commission’s ability to carry out its regulatory 

functions and investigate violations of the federal securities laws.   

6. The Commission staff found Respondents’ recordkeeping failures after 

commencing a risk-based initiative to investigate the use of off-channel and unpreserved 

communications at registered investment advisers.  Prior to being approached by the 

Commission staff, the Blackstone Advisers initiated a review of their recordkeeping failures and 

began a program of remediation.   

                                                 
1  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  

 



 

 

Respondents 

7. Blackstone Alternative Credit Advisors is a Delaware limited partnership, with its 

principal office in New York, New York, that has been registered with the Commission as an 

investment adviser since 2006.  Blackstone Inc., a Delaware corporation, with its principal office in 

New York, New York, is the parent of Blackstone Alternative Credit Advisors.  

8. Blackstone Management Partners is a Delaware limited liability company, with its 

principal office in New York, New York, that has been registered with the Commission as an 

investment adviser since 2005.  Blackstone Inc. is the parent of Blackstone Management Partners.  

9. Blackstone Real Estate Advisors is a Delaware limited partnership, with its 

principal office in New York, New York, that has been registered with the Commission as an 

investment adviser since 2007.  Blackstone Inc. is the parent of Blackstone Real Estate Advisors. 

Recordkeeping Requirements Under the Advisers Act 

10. Section 204 of the Advisers Act authorizes the Commission to issue rules 

requiring investment advisers to make and keep for prescribed periods, and furnish copies of, 

such records as necessary or appropriate in the public interest or for the protection of investors. 

11. The Commission adopted Rule 204-2 pursuant to this authority.  This rule 

specifies the manner and length of time that the records made in accordance with Commission 

rules, and certain other records made by investment advisers, must be maintained and produced 

promptly to Commission representatives. 

12. The rules adopted under Section 204 of the Advisers Act, including Advisers Act 

Rule 204-2(a)(7), require that investment advisers preserve for at least five years in an easily 

accessible place, the first two years in an appropriate office of the investment adviser, originals of 

all communications received and copies of all written communications sent relating to, among 

other things:  (a) any recommendation made or proposed to be made and any advice given or 

proposed to be given; (b) any receipt, disbursement or delivery of funds or securities; (c) the 

placing or execution of any order to purchase or sell any security; or (d) predecessor performance 

and the performance or rate of return of any or all managed accounts, portfolios, or securities 

recommendations. 

Respondents’ Policies and Procedures 

13. All Blackstone Inc. affiliated advisers, including Respondents, adopted compliance 

policies and procedures, including policies and procedures designed to ensure the retention of 

business-related records, including electronic communications, in compliance with the relevant 

recordkeeping provisions.   

14. Since at least 2011, personnel of all Blackstone Inc. affiliated advisers, including 

Respondents, were repeatedly advised that the use of unapproved electronic communications 

methods, including on Mobile Devices, was not permitted, and that they should not use personal 

email, chats or text messaging applications for business purposes.  All Blackstone Inc. affiliated 



 

 

advisers, including Respondents, implemented and conducted a surveillance program on 

electronic communications sent or received on approved platforms.  

15. Messages sent through firm-approved communications methods were monitored, 

subject to review, and archived.  Messages sent through unapproved communications methods, 

such as unapproved applications on Mobile Devices, were not monitored, subject to review or 

archived, unless they were identified and captured through other means, such as surveillance of 

firm-approved communications methods.  

16. Personnel of all Blackstone Inc. affiliated advisers, including Respondents’ 

personnel, received training, which was designed to address the Blackstone Inc. affiliated advisers’ 

supervision of their personnel and adherence to their books and recordkeeping requirements.  The 

policies and related trainings instructed personnel that electronic communications on approved 

platforms were subject to surveillance.  All Blackstone Inc. affiliated advisers, including 

Respondents, also had implemented procedures for all personnel requiring annual self-attestations 

of compliance.  

17. The Blackstone Advisers failed to implement systems reasonably expected to 

determine whether personnel were following the policies and procedures regarding electronic 

communications.  While permitting personnel to use approved communications methods on 

Mobile Devices for business communications, the Blackstone Advisers failed to implement 

sufficient monitoring to ensure that their recordkeeping and communications policies were being 

followed.   

Respondents’ Recordkeeping Failures 

18. In October 2022, the Commission staff commenced a risk-based initiative to 

investigate whether investment advisers were properly maintaining communications that they 

were required to preserve as records under the Advisers Act.  The Blackstone Advisers 

cooperated with the investigation by proactively gathering and reviewing communications from 

the Mobile Devices of certain of their personnel and responding to the staff’s requests for 

additional information.  The Blackstone Advisers also produced, at the request of the 

Commission staff, off-channel communications of a subset of these personnel relating to their 

investment advisory businesses.  These personnel included senior leadership such as managing 

directors and senior managing directors. 

19. The Commission staff’s investigation found off-channel communications by 

Blackstone Adviser personnel, including senior personnel.  All of the personnel whose 

communications were reviewed in the course of the investigation had sent or received multiple 

off-channel communications that were records required to be preserved by the Blackstone 

Advisers under the Advisers Act.  These off-channel communications were sent among 

colleagues as well as to external market participants.  

20. During the Relevant Period, personnel at the Blackstone Advisers sent and 

received off-channel text messages subject to the recordkeeping requirements of Advisers Act 

Rule 204-2.  



 

 

21. These off-channel communications included records required to be preserved 

under the Advisers Act because they related to a recommendation made or proposed to be made 

or advice given or proposed to be given.  For example, a Blackstone Alternative Credit Advisors 

senior managing director exchanged messages with multiple colleagues on an unapproved 

platform concerning proposed investment advice for a client.  Similarly, a Blackstone 

Management Partners senior managing director exchanged messages with a colleague on an 

unapproved platform concerning proposed investment advice for a client.  Additionally, a 

Blackstone Real Estate Advisors senior managing director exchanged messages with multiple 

colleagues on an unapproved platform concerning investment advice for a client. 

22. In addition, the investigation found off-channel communications that were records 

required to be preserved under the Advisers Act because they related to the placing or execution 

of orders to purchase or sell securities.  For example, a Blackstone Alternative Credit Advisors 

senior managing director exchanged multiple text messages with colleagues on an unapproved 

platform concerning placing securities trades for a client.  As another example, a Blackstone Real 

Estate Advisors managing director sent and received numerous written updates with multiple 

colleagues on an unapproved platform concerning placing trades for a client. 

Respondents’ Failure to Preserve Required Records Potentially 

Compromised and Delayed Commission Matters 

23. During the Relevant Period, Blackstone Inc. and its investment adviser affiliates, 

received and responded to Commission subpoenas for documents and records requests in 

Commission investigations.  By failing to maintain and preserve required records relating to their 

investment advisory businesses, Respondents and their investment adviser affiliates may have 

deprived the Commission of these off-channel communications in investigations. 

Respondents’ Violations and Failure to Supervise 

24. As a result of the conduct described above, the Blackstone Advisers willfully2 

violated Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder. 

25. As a result of the conduct described above, the Blackstone Advisers failed 

reasonably to supervise their personnel, with a view to preventing or detecting certain of their 

supervised persons’ aiding and abetting violations of Section 204 of the Advisers Act and Rule 

204-2(a)(7) thereunder, within the meaning of Section 203(e)(6) of the Advisers Act. 

Respondents’ Efforts to Comply 

26. In determining to accept the Offers, the Commission considered steps undertaken 

by Blackstone Inc. affiliated advisers, including Respondents, prior to and promptly after being 

approached by the Commission staff to comply with their books and recordkeeping obligations, as 

well as their responsiveness to and cooperation afforded the Commission staff.  Prior to this 

                                                 
2  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, 

“‘means no more than that the person charged with the duty knows what he is doing.’”  See 

Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 

(D.C. Cir. 1949)). 



 

 

action, Blackstone Inc. enhanced its policies and procedures to which all Blackstone Inc. 

affiliated adviser personnel, including Respondents’ personnel, were subject concerning the use 

of approved communications methods, including on Mobile Devices.  During the Relevant 

Period, Blackstone Inc. also issued repeated reminders about its relevant policies to personnel 

firm-wide.   

Undertakings 

The Respondents have undertaken to: 

27. Internal Audit.  Within one hundred eighty (180) days of the entry of this Order, 

the Blackstone Advisers shall require that their Internal Audit function(s) initiate a separate 

audit(s), to be completed within three hundred and sixty-five (365) days of the entry of this Order, 

consisting of the following: 

a.  A comprehensive review of the Blackstone Advisers’ supervisory, compliance, 

and other policies and procedures designed to ensure that the Blackstone Advisers’ 

electronic communications, including those found on Mobile Devices, are preserved in 

accordance with the requirements of the federal securities laws.  This review should 

include, but not be limited to, a review of the Blackstone Advisers’ policies and 

procedures to ascertain if they provide for any significant technology and/or behavioral 

restrictions that help prevent the risk of the use of unapproved communications methods 

on Mobile Devices in work conditions (e.g., traveling, site visits).   

 

b.  A comprehensive review of training conducted by the Blackstone Advisers 

designed to ensure personnel are complying with the requirements regarding the 

preservation of electronic communications, including those found on Mobile Devices, in 

accordance with the requirements of the federal securities laws, as well as a review of 

Blackstone Advisers’ requirement that their personnel certify in writing on a periodic 

basis that they are complying with preservation requirements.  

 

c.  An assessment of the surveillance program measures implemented by the 

Blackstone Advisers designed to ensure compliance, on an ongoing basis, with the 

requirements found in the federal securities laws to preserve electronic communications, 

including those found on Mobile Devices. 

 

d.  An assessment of the technological solutions that the Blackstone Advisers have 

begun implementing to meet the record retention requirements of the federal securities 

laws, including an assessment of the likelihood that the Blackstone Advisers’ personnel 

will use the technological solutions going forward and a review of the measures 

employed by the Blackstone Advisers to track personnel usage of new technological 

solutions.  

 

e.  A comprehensive review of the framework adopted by the Blackstone Advisers 

to address instances of non-compliance by the Blackstone Advisers’ personnel with the 

Blackstone Advisers’ policies and procedures concerning the use of Mobile Devices to 

communicate about the Blackstone Advisers’ business.  This review shall include a 



 

 

survey of how the Blackstone Advisers determined which personnel failed to comply with 

the Blackstone Advisers’ policies and procedures, the corrective action carried out, an 

evaluation of who violated the policies and procedures and why, what penalties were 

imposed, and whether penalties were handed out consistently across business lines and 

seniority levels.   

 

28. Recordkeeping.  The Blackstone Advisers shall preserve any record of compliance 

with these undertakings, including any materials supporting the certification made pursuant to 

Paragraph 29, in an easily accessible place for a period of not less than five (5) years from the 

end of the fiscal year during which the last entry was made on such record, the first two (2) years 

in an appropriate office of the Blackstone Advisers.  

29. Certification.  The Blackstone Advisers shall certify, in writing, compliance with 

the undertakings set forth above.  The certification shall identify the undertakings and provide 

written evidence of compliance in the form of a narrative.  The Commission staff may make 

reasonable requests for further evidence of compliance, and Respondents agree to provide such 

evidence.  The certification shall be submitted to Thomas P. Smith, Jr., Associate Regional 

Director, Division of Enforcement, Securities and Exchange Commission, New York Regional 

Office, 100 Pearl Street, Suite 20-100, New York, NY 10004, or such other person as the 

Commission staff may request, with a copy to the Office of Chief Counsel of the Enforcement 

Division, no later than sixty (60) days from the date of the completion of the undertakings. 

 In determining whether to accept the Offers, the Commission has considered these 

undertakings. 

 

IV. Sanctions 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondents’ Offers. 

 

 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 

ORDERED that: 

 

A. Respondents cease and desist from committing or causing any violations and any 

future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 

B. Respondents are censured.  

C. Respondent Blackstone Alternative Credit Advisors shall, within fourteen (14) 

days of the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the 

Securities and Exchange Commission for transfer to the general fund of the United States 

Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 

interest shall accrue pursuant to 31 U.S.C. § 3717.   

D. Respondent Blackstone Management Partners shall, within fourteen (14) days of 

the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the Securities 

and Exchange Commission for transfer to the general fund of the United States Treasury, subject 



 

 

to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional interest shall 

accrue pursuant to 31 U.S.C. § 3717.   

E. Respondent Blackstone Real Estate Advisors shall, within fourteen (14) days of 

the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the Securities 

and Exchange Commission for transfer to the general fund of the United States Treasury, subject 

to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional interest shall 

accrue pursuant to 31 U.S.C. § 3717.   

 Payment must be made in one of the following ways:   

 

(1) Respondents may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondents may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondents may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying the 

Blackstone Advisers as the Respondents in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Thomas P. 

Smith, Jr., Associate Regional Director, Division of Enforcement, Securities and Exchange 

Commission, New York Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004.   

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondents agree that in any Related Investor 

Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction 

of any award of compensatory damages by the amount of any part of Respondents’ payment of a 

civil penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants 

such a Penalty Offset, Respondents agree that they shall, within thirty (30) days after entry of a 

final order granting the Penalty Offset, notify the Commission’s counsel in this action and pay 

the amount of the Penalty Offset to the Securities and Exchange Commission.  Such a payment 

shall not be deemed an additional civil penalty and shall not be deemed to change the amount of 

the civil penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor 

Action” means a private damages action brought against Respondents by or on behalf of one or 

more investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary 


	I. Introduction
	II. Consent
	III. Facts
	Summary
	Respondents
	Recordkeeping Requirements Under the Advisers Act
	Respondents’ Policies and Procedures
	Respondents’ Recordkeeping Failures
	Respondents’ Failure to Preserve Required Records Potentially Compromised and Delayed Commission Matters
	Respondents’ Violations and Failure to Supervise
	Respondents’ Efforts to Comply
	Undertakings

	IV. Sanctions