New York-based hedge fund Perceptive Advisors, has agreed to pay a $1.5 million penalty to settle SEC charges that it failed to disclose conflicts of interest regarding certain special acquisition Companies (SPACs).
According to the SEC, in 2020, Perceptive advised its clients to invest in a series of SPACs that were sponsored by a private fund that Perceptive advised without disclosing the connection.
As well as a the monetary penalty, Perceptive has agreed to a cease-and-desist order and a censure to the settle the charges, without admitting or denying the SEC’s findings.
According to the SEC’s order Perceptive, which was founded by Joseph Edelman in 1991, formed multiple SPACs whose sponsors were owned both by Perceptive personnel and by a private fund that Perceptive advised. The Perceptive personnel were entitled to a portion of the compensation the SPAC sponsors received upon completion of the SPACs’ business combinations. The SEC’s order finds that Perceptive repeatedly invested assets of a private fund it advised in certain transactions that helped complete the SPACs’ business combinations and did not timely disclose these conflicts.
The SEC’s order also finds that Perceptive failed to timely file a required report on Schedule 13D concerning its beneficial ownership of stock in a public company. During the lapse in filing, through a private fund it advised, Perceptive improperly acquired beneficial ownership of additional stock in the public company.
