Perceptive Advisors has been fined $1.5 million for SPAC conflicts and transparency violations
Perceptive Advisors agreed to pay $1.5 million to settle allegations that it steered clients toward special purpose acquisition companies (SPACs) in which its investment advisers had financial interests and failed to disclose those conflicts in a timely manner.
The Securities and Exchange Commission (SEC) said Tuesday that Perceptive agreed to be censured and to refrain from future violations of investment and securities laws. The company neither accepted nor denied the findings of the agency.
As of March 2022, Perceptive, which focuses in life sciences investing, had around $10.4 billion in regulated assets under management. Since 2010, the firm has been registered with the SEC.
According to the SEC's order, Perceptive established numerous SPACs in the Cayman Islands in 2020, with sponsor ownership and management tied back to certain Perceptive employees and a life sciences fund held by the company. The assets of the life sciences fund were regularly invested in deals involving SPACs by the corporation.
According to the SEC, Perceptive advised customers in a way that would assist the SPACs in achieving business combinations, which would result in a payout to the workers serving as sponsors. The alleged conflicts of interest influenced advice staff offered to clients concerning the quantity and extent of their investments in the SPACs.
Perceptive has failed to have documented compliance policies and processes, including disclosure policies, in place since at least February 2020, according to the SEC. According to the decision, it lacked protocols regarding personnel co-ownership in SPACs and how to avoid conflicts of interest when advising clients in Perceptive-managed funds.
Perceptive also reportedly failed to timely disclose its beneficial ownership holding in Amicus Therapeutics, a public company with which it sought a business combination 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 discovered and was working to remedy compliance and disclosure holes when it got an initial inquiry from the SEC, according to an emailed statement from a corporate spokesman.
“Perceptive is pleased to have resolved this matter, in which it fully cooperated with the SEC,” the spokesman said.
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