Perceptive Advisors fined $1.5M for SPACs conflicts, disclosure violations

Perceptive agreed to be censured and cease and desist from future violations of investment and securities laws, the Securities and Exchange Commission (SEC) announced Tuesday. The firm neither admitted nor denied the agency’s findings.

Perceptive, which specializes in life sciences investing, had about $10.4 billion in regulated assets under management as of March 2022. The firm has been registered with the SEC since 2010.

In 2020, Perceptive created several SPACs incorporated in the Cayman Islands whose sponsor ownership and management linked back to certain Perceptive employees and a life sciences fund owned by the firm, the SEC detailed in its order. The company repeatedly invested the assets of the life sciences fund in transactions involving the SPACs.

Perceptive advised clients in a manner meant to help the SPACs achieve business combinations, which would result in a payout to the employees serving as sponsors, the SEC said. The alleged conflicts of interest influenced advice staff gave to clients concerning the size and scope of their investments in the SPACs.

Since at least February 2020, Perceptive failed to have in place written compliance policies and procedures, including disclosure policies, to help prevent violations of the Advisers Act, the SEC said. It lacked policies about personnel co-ownership in SPACs and how to avoid conflicts of interest when advising clients in Perceptive-managed funds, according to the order.

Perceptive also allegedly failed to timely disclose its beneficial ownership stake in public company Amicus Therapeutics, which it sought a business combination with involving one of the SPACs.

“Perceptive did not provide its private fund clients and investors with adequate information about the conflicted SPAC investments,” said C. Dabney O’Riordan, chief of the SEC Enforcement Division’s Asset Management Unit, in a press release. “Today’s action reflects the commission’s continued effort to hold private fund advisers accountable when they fail to live up to their obligations under the Advisers Act.”

Perceptive had internally identified its compliance and disclosure gaps and was in the process of remedying them when it received an initial inquiry from the SEC, a firm spokesman said in an emailed statement.

“Perceptive is pleased to have resolved this matter, in which it fully cooperated with the SEC,” the spokesman said.