OEP Capital Advisors Settles SEC Charges, Agrees to $4 Million Penalty Over Material Nonpublic Information Lapses

New York-based registered investment adviser OEP Capital Advisors has reached a settlement with the Securities and Exchange Commission (SEC), agreeing to pay a $4 million penalty to address alleged deficiencies related to the prevention of the misuse of material nonpublic information (MNPI). The SEC, in its administrative proceeding on Tuesday, revealed that OEP had failed to uphold written policies and procedures to prevent the misuse of MNPI and to ensure accurate communications to current and potential investors in the funds it advised.

According to the SEC's order, senior personnel at OEP repeatedly violated the firm's MNPI policies between 2019 and 2022. These violations involved sending marketing emails to current investors, potential investors, and industry contacts, which disclosed nonpublic information about mergers and acquisitions activities. The order stated that such disclosures were often made in unofficial update emails to specific large, current investors and in emails to potential new investors and industry contacts.

In addition to MNPI policy violations, senior personnel allegedly breached the firm's policies regarding the use of fund asset and securities holdings valuations in communications with current or potential investors. OEP's compliance manual specified that any written communication addressed to more than one person required prior approval by firm compliance personnel. The SEC's order noted multiple instances where communications by senior personnel did not follow this protocol.

OEP Capital Advisors received credit for its cooperation and remedial efforts, including the enhancement of compliance policies and procedures for MNPI and the implementation of firmwide compliance training related to investor communications. The firm, however, did not immediately provide a comment on the settlement and neither admitted nor denied the SEC's findings in reaching the resolution.

This settlement underscores the SEC's commitment to enforcing proper controls and compliance in the handling of material nonpublic information, highlighting the importance of stringent policies to prevent potential violations in the financial industry.

By fLEXI tEAM