Private Fund Adviser to Pay $1 Million for Advertising and Compliance Failures
April 17, 2020
File No. 3-19750
April 17, 2020 - The Securities and Exchange Commission announced today that Old Ironsides Energy, LLC, a registered investment adviser based in Boston, Massachusetts, has agreed to pay a $1 million penalty to settle charges relating to its marketing of a private fund, Old Ironsides Energy Fund II LP (OIE Fund II), which received commitments of over $1.3 billion.
According to the SEC's order, when marketing the OIE Fund II from March 2014 to April 2015, Old Ironsides distributed misleading marketing materials relating to its historical performance for managing direct drilling investments. Specifically, the marketing materials identified a large, legacy investment with strong, positive returns as part of its historical "Track Record" for early stage direct drilling investments. The SEC found that the marketing materials represented that Old Ironsides had direct management over this investment, when it was actually an investment in a private fund advised by a third party. Further, by including the private fund's performance, Old Ironsides' misleadingly improved its "Track Record" for these types of investments.
The SEC's Order finds that Old Ironsides willfully violated Section 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-1 and 206(4)-7 thereunder. Without admitting or denying the findings in the SEC's Order, Old Ironsides agreed to a cease-and-desist order, a censure, and a $1 million penalty.
The SEC's investigation was conducted by Zachary B. Sturges, with assistance from Douglas Smith of the New York office.