TL Ventures Inc. has agreed to pay almost $300,000 to settle Securities and Exchange Commission charges. The regulator contends that the Pennsylvania-based private equity firm violated “pay-to-play” rules for advisory fees it continued to get from state pension funds and the city of Philadelphia even after an associate made campaign contributions to the mayoral candidate and the state’s governor.
This is the SEC’s first case under the investment advisers’ pay-to-play rules, which went into effect in 2010. Under the rules, investment adviser are not allowed to provide compensatory services via pooled investment vehicles or to a government client for two years after a firm or one of its associates makes campaign contributions to political candidates or anyone able to impact the retention of advisers to oversee government client assets.
Philadelphia’s mayor gets to appoint three members of the Philadelphia Board of Pensions and Retirement. Pennsylvania’s governor gets to choose six of the state’s retirement system board members.
The SEC is also charging TL Ventures and Penn Mezzanine Partners Management L.P., an affiliated adviser, with improperly acting as unregistered investment advisers. Both claimed separately in 2012 that they were exempt from having to registers with the SEC. However, the regulators says that for purposes of determining whether they were exempt form these requirements or not, the two entities should have been integrated as a single investment adviser
TL Ventures settled without denying or admitting to the findings. The firm is paying $256,697 in disgorgement, $3,197 in prejudgment interest, and a $35,000 penalty.
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