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Regulation

Sofinnova Ventures settles with SEC over pay-to-play violation

Sofinnova Ventures agreed to pay $120,000 to settle "pay-to-play" charges from the Securities and Exchange Commission.

Sofinnova did not admit to or deny any of the SEC's findings.

According to the SEC, a Sofinnova employee made a $2,500 campaign contribution to Illinois gubernatorial candidate Bruce Rauner in April 2014. Mr. Rauner won that election and in the position of governor has the ability to influence the selection of money managers for the $54.1 billion Illinois Teachers' Retirement System, Springfield.

In 2011, TRS committed $40 million, and subsequently invested at least $33.2 million, in Sofinnova Ventures Partners VIII. In 2014, TRS then committed $50 million, and subsequently invested at least $12.5 million, in Sofinnova Ventures Partners IX, according to the SEC order.

For an eight-month period after the political contribution, Sofinnova provided advisory services to TRS. By providing those advisory services for compensation within two years after the contribution, Sofinnova was in violation of the pay-to-play rule, the SEC order stated.

The SEC's Rule 206(4)-5 was designed to address pay-to-play abuses involving campaign contributions made by certain investment advisers or their covered associates to government officials in a position to influence the selection of investment advisers to manage government client assets, including public pension fund assets. Investment advisers cannot provide investment advisory services for compensation to government clients, including an investment vehicle in which a government entity invests, for two years after the adviser or covered employees contribute to political candidates who can influence their selection.

A Sofinnova spokesman could not immediately be reached for comment. A TRS spokesman declined comment.

In its Form ADV dated Jan. 31, Sofinnova reported regulatory assets under management of approximately $1.7 billion, according to the SEC.