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TL Ventures pays $300,000 to settle pay to play charges

23 Jun 2014

SECPhiladelphia-based venture capital firm TL Ventures has agreed to pay $300,000 to settle the US Securities and Exchange Commission’s charges of violating the pay-to-play rules.

The firm allegedly continued to receive advisory fees from the city and state pension funds after an associate made campaign contributions in 2011 to the governor of Pennsylvania and a candidate for mayor of Philadelphia.

The pay-to-play rules, which were adopted in 2010, ban investment advisers from providing compensatory services for two years after making campaign contributions political candidates or officials that influence the selection or retention of advisers.

Chief of the SEC enforcement division’s municipal securities and public pensions unit LeeAnn Ghazil Gaunt said, “Public pension funds are increasingly investing in alternative investment vehicles such as hedge funds and private equity funds.

“When dealing with public pension fund clients, advisers to those kinds of investment vehicles should be mindful of the restrictions that can arise from political contributions.”

An SEC official recently said that private equity firms that they need more work to do on disclosures to investors.

Co-head of the private equity unit at SEC’s office of compliance inspections and examinations Igor Rozenblit  said that there “does appear to me at least that there is some sort of disconnect between what GPs and think their LPs know and what LPs actually know.”

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