On March 4, 2022, the U.S. Securities and Exchange Commission (SEC) charged  venture capital fund advisor Alumni Ventures Group, LLC (AVG) and its CEO, Michael Collins, with making misleading statements about its management fees to venture fund investors and engaging in inter-fund loans and cash transfers in violation of fund operating agreements. According to the SEC Order, AVG's misleading statements about management fees included representing to investors that AVG charged an "industry standard '2 and 20,'" management fee, which some investors interpreted as an annual 2.0% fee, whereas AVG actually charged 20.0% to investors at the time of their initial investment, representing 2.0% per year during the funds' expected 10-year term. Pursuant to the Administrative Order. which the SEC, AVG and Collins simultaneously settled, AVG repaid $4.7 million to affected funds and paid a penalty of $700,000, and Collins paid a penalty of $100,000. A copy of the SEC order can be found here

The SEC action can be seen as a continuation of the Gary Gensler SEC's activist attitude towards fund and fund advisor compliance, both as to funds and advisors registered under the Investment Company and Investment Advisors Acts of 1940 and those exempt from registration. See, SEC Proposes New Rules to Protect Private Fund Investors, February 14, 2022; and SEC Charges Three Companies $539 Million for Illegal General Solicitation, September 20, 2021, both available for download at Kurtin PLLC Whitepapers and Advisories. The often casual attitude of fund promoters and advisers in recent years towards their fund formation offering documents and day-to-day investor and prospective investor relations compliance is firmly on the SEC radar screen, and the penalties and profit disgorgement remedies have teeth. Securities law compliance is a cost of doing business.