SEC Charges RTW Investments for Failing to Disclose SPAC-Related Conflicts of Interest

ADMINISTRATIVE PROCEEDING
File No. 3-21473

May 30, 2023 - The Securities and Exchange Commission today announced settled charges against New York-based investment adviser RTW Investments, LP for failing to disclose conflicts of interest regarding its personnel's ownership of sponsors of special purpose acquisition companies (SPACs) into which RTW advised its clients to invest.

According to the SEC's order, RTW formed multiple SPACs whose sponsors were owned both by RTW personnel and by private funds that RTW advised. The RTW personnel were entitled to a portion of the compensation the SPAC sponsors received upon completion of the SPACs' business combinations. The order finds that RTW invested assets of private funds it advised in certain transactions that helped complete the SPACs' business combinations and did not timely disclose these conflicts. In addition, the order finds that RTW failed to timely file accurate reports on Schedule 13G concerning the beneficial ownership of the common stock of a public company formed as a result of a SPAC business combination.

RTW consented to the entry of the SEC's order finding that the firm violated the antifraud and compliance provisions of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder, and violated and/or caused violations of the beneficial ownership reporting provisions of Section 13(d) of the Securities Exchange Act of 1934 and Rules 13d-1 and 13d-2 thereunder. Without admitting or denying the findings, RTW agreed to a cease-and-desist order, a censure, and a $1.4 million civil penalty to settle the charges.

The SEC's continuing investigation is being conducted by Anne Hancock and Oreste McClung, members of the Enforcement Division's Asset Management Unit in the Boston and Philadelphia Regional Offices, and supervised by Brendan McGlynn, Amy Friedman, and Corey Schuster.