New York-based registered investment adviser OEP Capital Advisors agreed to pay a $4 million penalty as part of a settlement with the Securities and Exchange Commission (SEC) addressing alleged deficiencies regarding the prevention of misuse of material nonpublic information (MNPI).
OEP failed to maintain and enforce written policies and procedures to prevent misuse of MNPI and potentially misleading communications to current and prospective investors in funds it advised, the SEC said in its administrative proceeding Tuesday.
The details: From at least 2019 through 2022, OEP senior personnel repeatedly violated the firm’s MNPI policies by sending marketing emails to current investors, potential investors, and industry contacts that disclosed nonpublic information regarding mergers and acquisitions activities, according to the SEC’s order.
“Many of these disclosures were made in unofficial update emails sent by OEP senior personnel to specific large, current investors, sometimes in the context of soliciting additional investment,” the agency said. “Other such disclosures were made in emails to potential new investors and industry contacts.”
Senior personnel also allegedly violated firm policies for use of fund asset and securities holdings valuations in communications with current or potential investors.
Compliance considerations: OEP’s compliance manual stated any written communication addressed to more than one person was subject to prior approval by firm compliance personnel. On multiple occasions, the communications sent by senior personnel did not follow this protocol, per the order.
The firm received credit for cooperation and its remedial efforts, including enhancing its compliance policies and procedures for MNPI and its firmwide compliance training related to investor communications.
OEP did not respond to a request for comment. The firm neither admitted nor denied the SEC’s findings in reaching settlement.