TL Ventures Inc. will pay $300,000 to settle “pay-to-play” charges announced Friday by the SEC.
A Securities and Exchange Commission order charged the Wayne, Pa., private equity firm with violating SEC rules prohibiting investment advisers from getting paid for advising public pension funds and other government accounts within two years of making political contributions to people who could influence contracting decisions. It is the first case brought under rules adopted in June 2010. The firm agreed to settle without admitting or denying the charges.
TL Ventures lawyer Catherine Botticelli of Dechert LLP said the firm “is pleased to have this matter behind it.” She noted the SEC rules apply even if the entity was already invested when the contribution is made.
The SEC order states that TL Ventures received advisory fees from the $27 billion Pennsylvania State Employees’ Retirement System, Harrisburg, and $4.5 billion Philadelphia Board of Pensions and Retirement after an affiliate, Penn Mezzanine Partners Management LP, made a total of $4,500 in campaign contributions to candidates for governor and mayor in 2011. Both political offices either appoint or have influence over hiring of investment advisers.
SERS has invested $75 million in TL Ventures IV and V since 1999 and 2000, according to the SEC order. The Philadelphia pension board invested $10 million in TL Ventures V in 2000. Both funds have been winding down since 2010 and 2012, respectively, the SEC order said.
The SEC also charged TL Ventures and Penn Mezzanine Partners Management with improperly acting as unregistered investment advisers. While the firms claimed exemption from SEC registration, “their operations were closely integrated and significantly overlapped,” the order stated. In SEC documents filed March 31, TL Ventures reported $178 million in venture capital assets under management.
TL Ventures will disgorge $256,697 in advisory fees paid by the pension funds and pay $38,197 in penalties and interest to the SEC.
