Investment Adviser Settles SEC Charges for Disclosing MNPI

An investment adviser settled SEC charges for disclosing to investors, potential investors and industry contacts material non-public information ("MNPI") in violation of the adviser's policies and procedures.

In the Order, the SEC stated that the adviser's subscription documents, including private placement memoranda, contained confidential information on the adviser's middle market M&A strategy in its funds' portfolio.

Separately, the SEC found that senior personnel of the adviser made "quantified performance or embedded-gains claims" that were based on estimated current value calculations of the Funds' Portfolio Companies, that had not been approved by the adviser's valuation committee. The SEC found that these communications violated the adviser's policies and procedures.

As a result, the SEC found that the adviser violated Advisers Act Section 204A ("Prevention of misuse of nonpublic information"), Section 206 ("Prohibited transactions by investment advisers") and Advisers Act Rule 206(4)-7 ("Compliance procedures and practices").

In the settlement, which recognized certain remedial actions, the adviser was (i) censored, (ii) ordered to cease and desist from further violations and (iii) ordered to pay a civil money penalty in the amount of $4,000,000.

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