Investment advisory firm Perceptive Advisors agreed to a cease-and-desist order with the SEC for failing to disclose alleged conflicts of interest involving its employees’ ownership of sponsors of SPACs in which the firm advised its clients to invest, Troutman Pepper reports.
Between February and August 2020, Perceptive formed three SPACs — ARYA II, ARYA III, and ARYA IV (Arya SPACs) — each with a separate sponsor whose ownership was shared by five individuals associated with Perceptive, as well as Perceptive Life Sciences Master Fund, a PE fund for which Perceptive was an advisor. In their roles at Perceptive, the Perceptive Personnel made investment decisions on behalf of the PLSM Fund, as well as other advisory clients. Due to their ownership in the ARYA SPAC sponsors, the Perceptive Personnel were entitled to compensation upon completion of a business combination by the ARYA SPACs.
At issue is the SEC’s allegation that Perceptive did not disclose its SPAC-related conflicts of interest to the PLSM Fund’s board until after ARYA II completed a business combination; the PLSM Fund subscribed to a PIPE for ARYA III; and ARYA IV completed an IPO. In connection with the business combinations consummated by ARYA II and ARYA III, Perceptive caused the PLSM Fund to participate in PIPE transactions in the amount of $30 million and $55 million, respectively. Read more.
