SEC Charges Perceptive Advisors for Failing to Disclose SPAC-Related Conflicts of Interest
Washington D.C., Sept. 6, 2022 —
The Securities and Exchange Commission today charged New York-based investment adviser Perceptive Advisors LLC with failing to disclose conflicts of interest regarding its personnel’s ownership of sponsors of special purpose acquisition companies (SPACs) into which Perceptive advised its clients to invest.
According to the SEC’s order, in 2020, Perceptive 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.
“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 Enforcement Division’s Asset Management Unit. “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 consented to the entry of the SEC’s order finding that the firm violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-7 and 206(4)-8, as well as Section 13(d) of the Securities Exchange Act of 1934 and Rule 13d-1. Without admitting or denying the findings, Perceptive agreed to a cease-and-desist order, a censure, and a $1.5 million penalty to settle the charges.
The SEC’s investigation was conducted by Oreste McClung and supervised by Brendan McGlynn, both of the Enforcement Division’s Asset Management Unit in the Philadelphia Regional Office.