SEC Charges New York-Based Venture Capital Fund Adviser for Failing to Offset Consulting Fees
June 29, 2018
File No. 3-18564
June 29, 2018 - The Securities and Exchange Commission today announced findings that a New York-based venture capital fund adviser failed to offset certain consulting fees it received against management fees paid by funds it advised. The adviser, Aisling Capital LLC, has agreed to pay a $200,000 penalty to settle the charges.
According to the SEC's order issued today, Aisling received $1.2 million in consulting fees from two portfolio companies held by venture capital fund clients. The funds' organizational documents required Aisling to offset a specified percentage of consulting and other transaction fees it received against the management fees paid by the funds. However, Aisling failed to offset the $1.2 million in consulting fees, resulting in the funds and their limited partners overpaying $759,870 in management fees. Aisling reimbursed its clients the amounts it failed to offset, plus interest.
The SEC's order finds Aisling violated Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. Without admitting or denying the findings, Aisling consented to the SEC's order and agreed to pay a $200,000 penalty. The SEC considered Aisling's remedial acts and cooperation in reaching the settlement.
The SEC's investigation was conducted by Vincent T. Hull and Brian Fitzpatrick and supervised by Panayiota K. Bougiamas of the Enforcement Division's Asset Management Unit.