In re AISLING CAPITAL LLC

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 4616 / January 17, 2017 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-17784 
 
 
In the Matter of 
 
AISLING CAPITAL LLC,  
 
Respondent. 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 203(e) AND 203(k) 
OF THE INVESTMENT ADVISERS ACT OF 
1940, MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-AND-
DESIST ORDER  
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Aisling Capital LLC (“Aisling Capital” or “Respondent”).  
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the 
findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 
Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below.    
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
A. SUMMARY 
 
1. These proceedings arise out of violations of the Commission’s “pay-to-play” rule for 
investment advisers by Respondent Aisling Capital, an investment adviser to venture capital funds 
                                         
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 

 2 
which invest in early-stage healthcare related companies.  Rule 206(4)-5, promulgated under 
Section 206(4) of the Advisers Act, is a prophylactic rule designed to address pay-to-play abuses 
involving campaign contributions made by certain investment advisers or their covered associates to 
government officials who are in a position to influence the selection of investment advisers to 
manage government client assets, including public pension assets.  Among other things, Rule 
206(4)-5 prohibits certain investment advisers from providing investment advisory services for 
compensation to a government client (or to an investment vehicle in which a government entity 
invests) for two years after the adviser or certain of its executives or employees (known as covered 
associates) makes a campaign contribution to certain elected officials or candidates who can 
influence the selection of certain investment advisers.     
 
2.  In December 2011 and April 2012, a covered associate of Respondent made 
campaign contributions to a candidate for elected office and an elected official in New York, New 
York, both of whom had influence over selecting investment advisers for a public pension plan in 
New York, New York.  Within two years of these contributions, Respondent provided advisory 
services for compensation to the public pension plan.  By providing those advisory services for 
compensation, Respondent violated Section 206(4) of the Advisers Act and Rule 206(4)-5 
thereunder.     
 
B. RESPONDENT 
 
3. Aisling Capital LLC is a limited liability company located in New York, New York.  
Aisling Capital is not registered with the Commission as an investment adviser.  Aisling Capital 
reports to the Commission as an “exempt reporting adviser” under Section 204(a) of the Advisers 
Act and Rule 204-4 thereunder.  In its exempt reporting adviser report on Form ADV dated March 
10, 2016, Aisling Capital reported private fund assets of approximately $833 million.   
 
C. BACKGROUND  
 
 4. In 2005, the New York City Employees’ Retirement System (“NYCERS”) 
invested $7 million in Aisling Capital II, L.P., a venture capital fund advised by Respondent.  In 
2008, NYCERS invested $14 million in Aisling Capital III, L.P., another venture capital fund 
advised by Respondent (the “Funds”).  During the relevant times, NYCERS remained invested in 
the Funds.  The Funds were closed-end funds and investors were generally prohibited from 
withdrawing their money for the life of the funds.        
 
 5. On December 7, 2011, a covered associate
2
 of Respondent (the “Covered 
Associate”) made a $1,000 campaign contribution to the Manhattan Borough President.  On 
                                         
2
  Covered associates are defined to include:  (i) any general partner, managing member or executive 
officer, or other individual with a similar status or function; (ii) any employee who solicits a government 
entity for the investment adviser and any person who supervises, directly or indirectly, such employee; and 
(iii) any political action committee controlled by the investment adviser or by any of its covered associates.  
See Rule 206(4)-5(f)(2).   
 

 3 
April 26, 2012, the Covered Associate made a $500 campaign contribution to a candidate for 
Manhattan Borough President.
3
   
 
6. The office of Manhattan Borough President had the ability to influence the 
selection of investment advisers for NYCERS.  Specifically, the Manhattan Borough President is 
on the NYCERS board.  The NYCERS board has influence over investments made by NYCERS 
and the selection of investment advisers and pooled investment vehicles for the pension fund. 
 
 7. During the two years after the contributions, Respondent continued to provide 
investment advisory services for compensation to the Funds.   
 
8. Advisers Act Rule 206(4)-5(a)(1) prohibits any investment adviser registered with 
the Commission, investment adviser required to be registered with the Commission, foreign 
private adviser, or exempt reporting adviser from providing investment advisory services for 
compensation to a government entity
4
 within two years after a contribution to an official
5
 of a 
government entity made by the investment adviser or any covered associate of the investment 
adviser.  Advisers Act Rule 206(4)-5 also applies to investment advisers, including exempt 
reporting advisers, to a covered investment pool in which a government entity invests or is 
solicited to invest as though the adviser were providing or seeking to provide investment 
advisory services directly to the government entity.
6
  Advisers Act Rule 206(4)-5 does not require 
a showing of quid pro quo or actual intent to influence an elected official or candidate.   
9. As a public pension plan, NYCERS was a government entity as defined in 
Advisers Act Rule 206(4)-5(f)(5).  The contributor was a covered associate of Respondent as 
defined in Advisers Act Rule 206(4)-5(f)(2).  The candidates who received the contributions were 
                                         
3
  Rule 206(4)-5 has a de minimis exception, which permits covered associates to make aggregate 
contributions without triggering the two-year time out of up to $350, per election, to an elected official or 
candidate for whom the covered associate is entitled to vote,
 
and up to $150, per election, to an elected 
official or candidate for whom the covered associate is not entitled to vote.  See Rule 206(4)-5(b)(1). 
  
4
  See Rule 206(4)-5(f)(5). 
 
5
  “Official” includes any person who, at the time of the relevant contribution, was an incumbent, 
candidate or successful candidate for elective office of a government entity if the office is directly or 
indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a 
government entity or has authority to appoint any person who is directly or indirectly responsible for, or can 
influence the outcome of, the hiring of an investment adviser by a government entity.  See Rule 206(4)-
5(f)(6).   
 
6
  See Rule 206(4)-5(c).  A “covered investment pool” is defined as (i) an investment company 
registered under the Investment Company Act of 1940 (“Investment Company Act”) that is an investment 
option of a plan or program of a government entity; or (ii) any company that would be an investment 
company under Section 3(a) of the Investment Company Act, but for the exclusion provided from that 
definition by either Section 3(c)(1), Section 3(c)(7) or Section 3(c)(11) of that Act.  See Rule 206(4)-
5(f)(3).  Rule 206(4)-5 applies to investment advisers even if the government entity was already invested in 
the covered investment pool at the time of the contribution.  
 

 4 
both officials as defined in Advisers Act Rule 206(4)-5(f)(6) of government entities because the 
office that they were associated with or sought to become associated with had authority to 
influence the hiring of investment advisers by the government entity.  The Funds were covered 
investment pools as defined in Advisers Act Rule 206(4)-5(f)(3) because they would be 
investment companies under Section 3(a) of the Investment Company Act but for the exclusion 
from the definition of investment company provided by Section 3(c)(7) of the Investment 
Company Act.    
 
   10. Under Advisers Act Rule 206(4)-5, the two contributions triggered a two-year 
“time-out” on Respondent providing advisory services to NYCERS for compensation.  During the 
two years after the contributions, Respondent continued to provide advisory services for 
compensation to the Funds and, therefore, received advisory fees attributable to the investment of 
NYCERS in the Funds.   
 
D. VIOLATIONS 
  
 11. As a result of the conduct described above, Respondent willfully
7
 violated Section 
206(4) of the Advisers Act and Rule 206(4)-5 thereunder, which makes it unlawful for any 
investment adviser registered (or required to be registered) with the Commission, or unregistered 
in reliance on the exemption available under Section 203(b)(3) of the Advisers Act, or that is an 
exempt reporting adviser, to provide investment advisory services for compensation to a 
government entity within two years after a contribution to an official of the government entity is 
made by the investment adviser or any covered associate of the investment adviser. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent Aisling Capital’s Offer. 
 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 
ORDERED that: 
 
  A. Respondent Aisling Capital shall cease and desist from committing or causing 
any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-5 
thereunder.   
 
 B. Respondent Aisling Capital is censured. 
 
                                         
7
  A willful violation of the securities laws means merely “‘that the person charged with the duty 
knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. 
SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “‘also be aware that he 
is violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. 
Cir. 1965)). 
 

 5 
 C. Respondent Aisling Capital shall, within 10 days of the entry of this Order, pay a 
civil money penalty in the amount of $70,456 to the Securities and Exchange Commission for 
transfer to the general fund of the United States Treasury, subject to Exchange Act Section 
21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 
§3717.  Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2)  Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3)  Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
  Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Aisling 
Capital LLC as the Respondent in these proceedings, the file number of these proceedings; a 
copy of which cover letter and check or money order must be sent to LeeAnn Ghazil Gaunt, 
Chief, Public Finance Abuse Unit, Securities and Exchange Commission, Boston Regional 
Office, 33 Arch Street, 23
rd
 Floor, Boston, MA 02110. 
 
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 By the Commission. 
 

 6 
 
 
 
       Brent J. Fields  
       Secretary  

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 
 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 4616 / January 17, 2017 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17784 
 

 

In the Matter of 
 

AISLING CAPITAL LLC,  
 

Respondent. 
 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTIONS 203(e) AND 203(k) 

OF THE INVESTMENT ADVISERS ACT OF 

1940, MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-AND-

DESIST ORDER  
 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against Aisling Capital LLC (“Aisling Capital” or “Respondent”).  

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 

Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below.    

 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 

A. SUMMARY 

 

1. These proceedings arise out of violations of the Commission’s “pay-to-play” rule for 

investment advisers by Respondent Aisling Capital, an investment adviser to venture capital funds 

                                         
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 



 2 

which invest in early-stage healthcare related companies.  Rule 206(4)-5, promulgated under 

Section 206(4) of the Advisers Act, is a prophylactic rule designed to address pay-to-play abuses 

involving campaign contributions made by certain investment advisers or their covered associates to 

government officials who are in a position to influence the selection of investment advisers to 

manage government client assets, including public pension assets.  Among other things, Rule 

206(4)-5 prohibits certain investment advisers from providing investment advisory services for 

compensation to a government client (or to an investment vehicle in which a government entity 

invests) for two years after the adviser or certain of its executives or employees (known as covered 

associates) makes a campaign contribution to certain elected officials or candidates who can 

influence the selection of certain investment advisers.     

 

2.  In December 2011 and April 2012, a covered associate of Respondent made 

campaign contributions to a candidate for elected office and an elected official in New York, New 

York, both of whom had influence over selecting investment advisers for a public pension plan in 

New York, New York.  Within two years of these contributions, Respondent provided advisory 

services for compensation to the public pension plan.  By providing those advisory services for 

compensation, Respondent violated Section 206(4) of the Advisers Act and Rule 206(4)-5 

thereunder.     

 

B. RESPONDENT 

 

3. Aisling Capital LLC is a limited liability company located in New York, New York.  

Aisling Capital is not registered with the Commission as an investment adviser.  Aisling Capital 

reports to the Commission as an “exempt reporting adviser” under Section 204(a) of the Advisers 

Act and Rule 204-4 thereunder.  In its exempt reporting adviser report on Form ADV dated March 

10, 2016, Aisling Capital reported private fund assets of approximately $833 million.   

 

C. BACKGROUND  

 

 4. In 2005, the New York City Employees’ Retirement System (“NYCERS”) 

invested $7 million in Aisling Capital II, L.P., a venture capital fund advised by Respondent.  In 

2008, NYCERS invested $14 million in Aisling Capital III, L.P., another venture capital fund 

advised by Respondent (the “Funds”).  During the relevant times, NYCERS remained invested in 

the Funds.  The Funds were closed-end funds and investors were generally prohibited from 

withdrawing their money for the life of the funds.        

 

 5. On December 7, 2011, a covered associate
2
 of Respondent (the “Covered 

Associate”) made a $1,000 campaign contribution to the Manhattan Borough President.  On 

                                         
2
  Covered associates are defined to include:  (i) any general partner, managing member or executive 

officer, or other individual with a similar status or function; (ii) any employee who solicits a government 

entity for the investment adviser and any person who supervises, directly or indirectly, such employee; and 

(iii) any political action committee controlled by the investment adviser or by any of its covered associates.  

See Rule 206(4)-5(f)(2).   

 



 3 

April 26, 2012, the Covered Associate made a $500 campaign contribution to a candidate for 

Manhattan Borough President.
3
   

 

6. The office of Manhattan Borough President had the ability to influence the 

selection of investment advisers for NYCERS.  Specifically, the Manhattan Borough President is 

on the NYCERS board.  The NYCERS board has influence over investments made by NYCERS 

and the selection of investment advisers and pooled investment vehicles for the pension fund. 

 

 7. During the two years after the contributions, Respondent continued to provide 

investment advisory services for compensation to the Funds.   

 

8. Advisers Act Rule 206(4)-5(a)(1) prohibits any investment adviser registered with 

the Commission, investment adviser required to be registered with the Commission, foreign 

private adviser, or exempt reporting adviser from providing investment advisory services for 

compensation to a government entity
4
 within two years after a contribution to an official

5
 of a 

government entity made by the investment adviser or any covered associate of the investment 

adviser.  Advisers Act Rule 206(4)-5 also applies to investment advisers, including exempt 

reporting advisers, to a covered investment pool in which a government entity invests or is 

solicited to invest as though the adviser were providing or seeking to provide investment 

advisory services directly to the government entity.
6
  Advisers Act Rule 206(4)-5 does not require 

a showing of quid pro quo or actual intent to influence an elected official or candidate.   

9. As a public pension plan, NYCERS was a government entity as defined in 

Advisers Act Rule 206(4)-5(f)(5).  The contributor was a covered associate of Respondent as 

defined in Advisers Act Rule 206(4)-5(f)(2).  The candidates who received the contributions were 

                                         
3
  Rule 206(4)-5 has a de minimis exception, which permits covered associates to make aggregate 

contributions without triggering the two-year time out of up to $350, per election, to an elected official or 

candidate for whom the covered associate is entitled to vote,
 

and up to $150, per election, to an elected 

official or candidate for whom the covered associate is not entitled to vote.  See Rule 206(4)-5(b)(1). 

  
4
  See Rule 206(4)-5(f)(5). 

 
5
  “Official” includes any person who, at the time of the relevant contribution, was an incumbent, 

candidate or successful candidate for elective office of a government entity if the office is directly or 

indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a 

government entity or has authority to appoint any person who is directly or indirectly responsible for, or can 

influence the outcome of, the hiring of an investment adviser by a government entity.  See Rule 206(4)-

5(f)(6).   

 
6
  See Rule 206(4)-5(c).  A “covered investment pool” is defined as (i) an investment company 

registered under the Investment Company Act of 1940 (“Investment Company Act”) that is an investment 

option of a plan or program of a government entity; or (ii) any company that would be an investment 

company under Section 3(a) of the Investment Company Act, but for the exclusion provided from that 

definition by either Section 3(c)(1), Section 3(c)(7) or Section 3(c)(11) of that Act.  See Rule 206(4)-

5(f)(3).  Rule 206(4)-5 applies to investment advisers even if the government entity was already invested in 

the covered investment pool at the time of the contribution.  

 



 4 

both officials as defined in Advisers Act Rule 206(4)-5(f)(6) of government entities because the 

office that they were associated with or sought to become associated with had authority to 

influence the hiring of investment advisers by the government entity.  The Funds were covered 

investment pools as defined in Advisers Act Rule 206(4)-5(f)(3) because they would be 

investment companies under Section 3(a) of the Investment Company Act but for the exclusion 

from the definition of investment company provided by Section 3(c)(7) of the Investment 

Company Act.    

 

   10. Under Advisers Act Rule 206(4)-5, the two contributions triggered a two-year 

“time-out” on Respondent providing advisory services to NYCERS for compensation.  During the 

two years after the contributions, Respondent continued to provide advisory services for 

compensation to the Funds and, therefore, received advisory fees attributable to the investment of 

NYCERS in the Funds.   

 

D. VIOLATIONS 

  

 11. As a result of the conduct described above, Respondent willfully
7
 violated Section 

206(4) of the Advisers Act and Rule 206(4)-5 thereunder, which makes it unlawful for any 

investment adviser registered (or required to be registered) with the Commission, or unregistered 

in reliance on the exemption available under Section 203(b)(3) of the Advisers Act, or that is an 

exempt reporting adviser, to provide investment advisory services for compensation to a 

government entity within two years after a contribution to an official of the government entity is 

made by the investment adviser or any covered associate of the investment adviser. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent Aisling Capital’s Offer. 

 

 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 

ORDERED that: 

 

  A. Respondent Aisling Capital shall cease and desist from committing or causing 

any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-5 

thereunder.   

 

 B. Respondent Aisling Capital is censured. 

 

                                         
7
  A willful violation of the securities laws means merely “‘that the person charged with the duty 

knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. 

SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “‘also be aware that he 

is violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. 

Cir. 1965)). 

 



 5 

 C. Respondent Aisling Capital shall, within 10 days of the entry of this Order, pay a 

civil money penalty in the amount of $70,456 to the Securities and Exchange Commission for 

transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 

§3717.  Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2)  Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3)  Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

  Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Aisling 

Capital LLC as the Respondent in these proceedings, the file number of these proceedings; a 

copy of which cover letter and check or money order must be sent to LeeAnn Ghazil Gaunt, 

Chief, Public Finance Abuse Unit, Securities and Exchange Commission, Boston Regional 

Office, 33 Arch Street, 23
rd

 Floor, Boston, MA 02110. 

 

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 

of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

 By the Commission. 

 



 6 

 

 

 

       Brent J. Fields  

       Secretary