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TL Ventures, Penn Mezz Dodd-Frank exemption claim rejected by SEC

25 Jun 2014

gavelThe US Securities and Exchange Commission said that Philadelphia-based venture capital firm TL Ventures and its affiliate improperly claims that they are exempt from the requirement to register with the authorities.

The affiliate, Penn Mezzanine Partners Management, said it had assets of less than $150m, while TL Ventures said that it only managed venture funds, which would make them both exempts from the 2010 Dodd-Frank law.

However, the SEC has found that their operations were closely integrated and significantly overlapped.

“Because they were not operationally independent of each other, TL Ventures and Penn Mezzanine should have been integrated as a single investment adviser for purposes of registration requirements or determining the applicability of any exemption,” said the regulator.

TL has agreed to pay $300,000 to settle the SEC’s charges which include 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.

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