2017-01-01 SEC Press press_release 62 KB 2,264 chars

10 Firms Violated Pay-to-Play Rule By Accepting Pension Fund Fees Following Campaign Contributions

Release
2017-15
Source PDF JSON
summary

Ten investment advisory firms paid penalties between $35,000 and $100,000 to settle SEC charges for violating the pay-to-play rule by accepting fees from public pension funds within two years of campaign contributions made by their associates to officials who could influence fund selections, without admitting or denying wrongdoing.

paragraph

The SEC charged ten investment advisory firms with violating Rule 206(4)-5 under the Investment Advisers Act of 1940 by receiving compensatory fees from public pension funds within two years of campaign contributions by their associates to officials with influence over fund decisions. The firms, including NGN Capital ($100,000), Pershing Square Capital Management ($75,000), and Alta Communications ($35,000), consented to censure and monetary penalties ranging from $35,000 to $100,000 without admitting or denying the findings. The SEC’s Public Finance Abuse Unit led the investigation, emphasizing that the two-year timeout rule is designed to prevent pay-to-play corruption in the management of public pension assets.

narrative

The Securities and Exchange Commission announced that ten investment advisory firms agreed to pay penalties between $35,000 and $100,000 to settle charges of violating the pay-to-play rule under Rule 206(4)-5 of the Investment Advisers Act of 1940. The firms were found to have accepted advisory fees from city or state pension funds within two years after their associates made campaign contributions to elected officials or candidates who could influence pension fund investment decisions. NGN Capital paid the highest penalty at $100,000, while Alta Communications and Cypress Advisors each paid $35,000, with most others fined $75,000. Without admitting or denying the allegations, all firms consented to the SEC’s orders and were formally censured. The SEC’s Public Finance Abuse Unit, alongside the Philadelphia Regional Office, coordinated the investigation, highlighting the rule’s intent to deter corruption in public fund investments. SEC officials stressed that advisory firms must actively monitor and manage the political activities of their associates to avoid inadvertent violations. The case underscores the regulatory focus on safeguarding public pension assets from undue influence through campaign finance ties.

Enriched metadata

Scheme
investment-adviser-fraud (100%)
Outcome
settled
Settlement
$100,000
Classified investment-adviser-fraud(confidence 100%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →
Statutes
Section 206(4) of the Investment Advisers Act
Parties
aisling capitalalta communicationschief of the sec enforcement division's public finance abuse unitcommonwealth venture management corporationcypress advisorsffl partnersleeann ghazil gauntlime rock managementngn capitalsec's investigationssec's investment adviser pay-to-play ruleSecurities and Exchange Commissionthe banc funds company
Keywords
campaign contributionsfirmspensionpension fundsinvestmentcontributionssecpublicpension fundpublic pensioncontributions madetwo-year timeoutcampaignfundspay-to-play

Exhibits & Attached Documents (10)

Extracted insights

Dollar amounts 5
  • $100K $100,000 $100K–$1M
  • $75K $75,000 $10K–$100K
  • $70K $70,456 $10K–$100K
  • $45K $45,000 $10K–$100K
  • $35K $35,000 $10K–$100K
Entities 13
  • company aisling capital
  • person alta communications
  • agency chief of the sec enforcement division's public finance abuse unit
  • company commonwealth venture management corporation
  • company cypress advisors
  • company ffl partners
  • person leeann ghazil gaunt
  • person lime rock management
  • company ngn capital
  • agency sec's investigations
  • agency sec's investment adviser pay-to-play rule
  • agency Securities and Exchange Commission
  • company the banc funds company
Triples 16
  • Securities And Exchange Commission announced 10 investment advisory firms agreed to pay penalties ranging from $35,000 to $100,000
  • 10 Investment Advisory Firms violated SEC's investment adviser pay-to-play rule
  • Adams Capital Management agreed to pay $45,000 penalty
  • Aisling Capital agreed to pay $70,456 penalty
  • Alta Communications agreed to pay $35,000 penalty
  • Commonwealth Venture Management Corporation agreed to pay $75,000 penalty
  • Cypress Advisors agreed to pay $35,000 penalty
  • FFL Partners agreed to pay $75,000 penalty
  • Lime Rock Management agreed to pay $75,000 penalty
  • NGN Capital agreed to pay $100,000 penalty
  • Pershing Square Capital Management agreed to pay $75,000 penalty
  • The Banc Funds Company agreed to pay $75,000 penalty
  • 10 Investment Advisory Firms violated Section 206(4) of the Investment Advisers Act of 1940
  • 10 Investment Advisory Firms violated Rule 206(4)-5
  • LeeAnn Ghazil Gaunt is Chief of the SEC Enforcement Division's Public Finance Abuse Unit
  • Louis A. Randazzo coordinated SEC's investigations
PDF (from attached: pdf)
In re ADAMS CAPITAL MANAGEMENT · Source
Text layers
Extracted body text (2,264c) 
The Securities and Exchange Commission today announced that 10 investment advisory firms have agreed to pay penalties ranging from $35,000 to $100,000 to settle charges that they violated the SEC’s investment adviser pay-to-play rule by receiving compensation from public pension funds within two years after campaign contributions made by the firms’ associates. According to the SEC’s orders, investment advisers are subject to a two-year timeout from providing compensatory advisory services either directly to a government client or through a pooled investment vehicle after political contributions were made to a candidate who could influence the investment adviser selection process for a public pension fund or appoint someone with such influence. The SEC’s orders find that these 10 firms violated the two-year timeout by accepting fees from city or state pension funds after their associates made campaign contributions to elected officials or political candidates with the potential to wield influence over those pension funds. “The two-year timeout is intended to discourage pay-to-play practices in the investment of public money, including public pension funds,” said LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit. “Advisory firms must be mindful of the restrictions that can arise from campaign contributions made by their associates.” Without admitting or denying the findings, the 10 firms consented to the SEC’s orders finding they violated Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-5. The firms are censured and must pay the following monetary penalties: Adams Capital Management – $45,000 Aisling Capital – $70,456 Alta Communications – $35,000 Commonwealth Venture Management Corporation – $75,000 Cypress Advisors – $35,000 FFL Partners – $75,000 Lime Rock Management – $75,000 NGN Capital – $100,000 Pershing Square Capital Management – $75,000 The Banc Funds Company – $75,000 The SEC’s investigations were coordinated by Louis A. Randazzo, who conducted them along with Kevin B. Currid, Brian Fagel, Natalie G. Garner, William T. Salzmann, and Monique Winkler of the Public Finance Abuse Unit and Kelly Gibson and Benjamin D. Schireson of the Philadelphia Regional Office.
OCR text (2,264c · plain-text · 99% conf) 
The Securities and Exchange Commission today announced that 10 investment advisory firms have agreed to pay penalties ranging from $35,000 to $100,000 to settle charges that they violated the SEC’s investment adviser pay-to-play rule by receiving compensation from public pension funds within two years after campaign contributions made by the firms’ associates. According to the SEC’s orders, investment advisers are subject to a two-year timeout from providing compensatory advisory services either directly to a government client or through a pooled investment vehicle after political contributions were made to a candidate who could influence the investment adviser selection process for a public pension fund or appoint someone with such influence. The SEC’s orders find that these 10 firms violated the two-year timeout by accepting fees from city or state pension funds after their associates made campaign contributions to elected officials or political candidates with the potential to wield influence over those pension funds. “The two-year timeout is intended to discourage pay-to-play practices in the investment of public money, including public pension funds,” said LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit. “Advisory firms must be mindful of the restrictions that can arise from campaign contributions made by their associates.” Without admitting or denying the findings, the 10 firms consented to the SEC’s orders finding they violated Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-5. The firms are censured and must pay the following monetary penalties: Adams Capital Management – $45,000 Aisling Capital – $70,456 Alta Communications – $35,000 Commonwealth Venture Management Corporation – $75,000 Cypress Advisors – $35,000 FFL Partners – $75,000 Lime Rock Management – $75,000 NGN Capital – $100,000 Pershing Square Capital Management – $75,000 The Banc Funds Company – $75,000 The SEC’s investigations were coordinated by Louis A. Randazzo, who conducted them along with Kevin B. Currid, Brian Fagel, Natalie G. Garner, William T. Salzmann, and Monique Winkler of the Public Finance Abuse Unit and Kelly Gibson and Benjamin D. Schireson of the Philadelphia Regional Office.

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