{"id":80911,"date":"2022-03-07T00:36:59","date_gmt":"2022-03-07T05:36:59","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=80911"},"modified":"2022-03-07T00:36:59","modified_gmt":"2022-03-07T05:36:59","slug":"venture-capital-fund-adviser-charged-with-misleading-investors","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/03\/2022\/venture-capital-fund-adviser-charged-with-misleading-investors.html","title":{"rendered":"Venture Capital Fund Adviser Charged with Misleading Investors"},"content":{"rendered":"\n<p>(HedgeCo.Net) The Securities and Exchange Commission has charged venture capital fund adviser <strong>Alumni Ventures Group, LLC (<\/strong>AVG) with making misleading statements about its management fees and engaging in inter-fund transactions in breach of fund operating agreements. The SEC also charged AVG\u2019s <strong>CEO, Michael Collins<\/strong>, with causing AVG\u2019s violations. To settle the charges, AVG repaid $4.7 million to affected funds and agreed to pay a $700,000 penalty, whereas Collins agreed to pay a $100,000 penalty.<\/p>\n\n\n\n<p>According to the SEC\u2019s order, AVG\u2019s website and other marketing communications represented that its management fee for the venture capital funds that it managed was the \u201cindustry standard \u20182 and 20.\u2019\u201d The order found that these representations were misleading because they led some investors to believe that AVG would collect a two-percent management fee during each year of its funds\u2019 10-year term, and separately collect a 20-percent performance fee. According to the order, AVG\u2019s typical practice was instead to assess management fees totaling 20 percent of an investor\u2019s fund investment (representing ten years\u2019 of two-percent annual management fees) upon the investor\u2019s initial fund investment.<\/p>\n\n\n\n<p>The order found that Collins approved of AVG employees using the \u201cindustry standard \u20182 and 20\u2019\u201d language and personally used it with fund investors and prospective investors. The order also included findings that AVG made inter-fund loans and cash transfers between funds and made loans to certain funds in violation of the funds\u2019 respective operating agreements.<\/p>\n\n\n\n<p>\u201cVenture capital fund advisers, like all advisers to funds, must accurately describe their fees and abide by the funds\u2019 agreements,\u201d said Adam S. Aderton, Co-Chief of the SEC Enforcement Division\u2019s Asset Management Unit. \u201cWhen appropriate, enforcement actions like this one hold firms accountable when they fail to meet these obligations.\u201d<\/p>\n\n\n\n<p>AVG and Collins consented to the entry of the SEC\u2019s order finding that AVG violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8, and that Collins caused AVG\u2019s violations. Without admitting or denying the SEC\u2019s findings, AVG and Collins agreed to a cease-and-desist order, AVG agreed to a censure and to pay a $700,000 penalty, and Collins agreed to pay a $100,000 penalty.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(HedgeCo.Net) The Securities and Exchange Commission has charged venture capital fund adviser Alumni Ventures Group, LLC (AVG) with making misleading statements about its management fees and engaging in inter-fund transactions in breach of fund operating agreements. The SEC also charged [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-80911","post","type-post","status-publish","format-standard","hentry","category-syndicated"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80911","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=80911"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80911\/revisions"}],"predecessor-version":[{"id":80912,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80911\/revisions\/80912"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=80911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=80911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=80911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}