In re COMMONWEALTH VENTURE
Commonwealth Venture Management Corp. violated the SEC’s pay-to-play rule by having two covered associates make $500 campaign contributions to a Massachusetts gubernatorial candidate with influence over the state’s public pension fund (PRIM) and by one associate soliciting contributions while the firm was still receiving advisory fees, resulting in a $75,000 penalty, censure, and cease-and-desist order.
Commonwealth Venture Management Corp., an exempt reporting adviser, violated Rule 206(4)-5 of the Investment Advisers Act by having two covered associates each contribute $500 to a Massachusetts gubernatorial candidate whose office influenced the selection of investment advisers for the state’s public pension fund, PRIM. One associate further solicited contributions at a fundraising event in June 2014 while Commonwealth Venture was still receiving carried interest from PRIM’s $50 million investment in its fund, triggering the rule’s two-year prohibition. The SEC found no de minimis exception applied, determined the violations were willful, and imposed a $75,000 civil penalty, a censure, and a cease-and-desist order without admission of guilt.
Commonwealth Venture Management Corp., an exempt reporting adviser based in Woburn, Massachusetts, managed venture capital funds and held a $50 million investment from the Massachusetts Pension Reserves Investment Management Board (PRIM) since 1998. Between October 2013 and June 2014, two covered associates made $500 campaign contributions each to a candidate for Governor of Massachusetts, an office with authority over PRIM’s selection of investment advisers. In June 2014, one of these associates co-hosted a fundraising event soliciting contributions for the same candidate while Commonwealth Venture was still receiving advisory compensation from PRIM’s investment. Although the associates later sought refunds, the SEC determined the de minimis exception did not apply due to the aggregate contributions and the official’s influence over fund selection. The firm’s continued provision of advisory services during the two-year prohibition period constituted a willful violation of Rule 206(4)-5 under Section 206(4) of the Investment Advisers Act. Without admitting or denying the findings, Commonwealth Venture consented to an SEC order imposing a $75,000 civil penalty, a formal censure, and a cease-and-desist order, and agreed not to seek offsets from investor claims or retain any court-granted reimbursements within 30 days.
Extracted insights
- $500 $500 <$10K
- company commonwealth venture management corp.
- company one of the covered associates
- company public pension fund
- Securities and Exchange Commission deems appropriate public administrative and cease-and-desist proceedings
- Commonwealth Venture Management Corp. submitted Offer of Settlement
- Commission determined to accept Offer of Settlement
- Commonwealth Venture Management Corp. consents to entry of Order
- Proceedings involve violations of Commission’s “Pay-To-Play” Rule
- Two covered associates of Respondent made campaign contributions to a candidate for elected office in Massachusetts
- Respondent provided advisory services for compensation to public pension fund
- One of the covered associates solicited campaign contributions for the candidate
ange Commission (“Commission”) (“ Act”) ” or “Respondent” of Settlement (the “Offer”) which the Commission has determined, except as to the Commission’s jurisdiction, as set forth below. the Commission’s “pay- to- play” rule for “exempt reporting adviser” Associate”) made a $500 campaign contribution to (“Candidate for Governor”). In June 2014, the First Covered Associate made an additional $500 contribution to the Candidate for Governor’s campaign “Official” includes out" "time" nt’s Candidate’s association or possible future association with a government entity to which 5(c). A “covered investment pool” is defined as (i) an investment company registered under the Investment Company Act of 1940 (“Investment Company Act”) that is an investment A willful violation of the securities laws means merely “that the person charged with the duty knows what he is doing.’’ ___, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “‘also be aware that he is violating one of the Rules or Acts.’’ __ r’s check, or United States Treasury check, or United States Treasury award of compensatory damages by the amount of any part of Respondent’s payment of a civil “penalty” or “fine” to the Commission, notify the Commission’
ange Commission (“Commission”) (“ Act”) ” or “Respondent” of Settlement (the “Offer”) which the Commission has determined, except as to the Commission’s jurisdiction, as set forth below. the Commission’s “pay- to- play” rule for “exempt reporting adviser” Associate”) made a $500 campaign contribution to (“Candidate for Governor”). In June 2014, the First Covered Associate made an additional $500 contribution to the Candidate for Governor’s campaign “Official” includes out" "time" nt’s Candidate’s association or possible future association with a government entity to which 5(c). A “covered investment pool” is defined as (i) an investment company registered under the Investment Company Act of 1940 (“Investment Company Act”) that is an investment A willful violation of the securities laws means merely “that the person charged with the duty knows what he is doing.’’ ___, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “‘also be aware that he is violating one of the Rules or Acts.’’ __ r’s check, or United States Treasury check, or United States Treasury award of compensatory damages by the amount of any part of Respondent’s payment of a civil “penalty” or “fine” to the Commission, notify the Commission’