In re LIME ROCK MANAGEMENT LP

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No.  4611 / January 17, 2017 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-17782 
 
 
In the Matter of 
 
LIME ROCK MANAGEMENT LP,  
 
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 Lime Rock Management LP (“Lime Rock” 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: 
                                         
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 
A. SUMMARY 
 
1. These proceedings involve a violation of the Commission’s “pay-to-play” rule for 
investment advisers by Respondent Lime Rock, an investment adviser to private equity funds 
which invest in energy 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 fund 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 October 2015, a covered associate of Respondent made a campaign contribution 
to an elected official in Ohio, who had influence over selecting investment advisers for a public 
pension plan in Ohio.  Within two years of this contribution, Respondent provided advisory 
services for compensation to the public pension plan.  By providing those advisory services for 
compensation within two years of this contribution, Respondent violated Section 206(4) of the 
Advisers Act and Rule 206(4)-5 thereunder. 
 
B. RESPONDENT 
 
 3. Lime Rock Management LP is a limited partnership headquartered in Westport, 
Connecticut.  Lime Rock is registered with the Commission as an investment adviser.  As of 
December 31, 2015, Lime Rock had assets under management of $5.3 billion. 
 
C. BACKGROUND  
 
 4. In 2004, the State Teachers’ Retirement System of Ohio (“STRS”), a public 
pension plan in Ohio, committed to invest, and subsequently invested, approximately $30 million 
in Lime Rock Partners III, L.P., a private equity fund advised by Respondent.  In 2006, STRS 
committed to invest, and subsequently invested, approximately $43 million in Lime Rock Partners 
IV, L.P., a private equity fund advised by Respondent.  In 2008, STRS committed to invest, and 
subsequently invested, approximately $75 million in Lime Rock Partners V, L.P., a private equity 
fund advised by Respondent (the “Funds”).  During all relevant times, STRS 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 fund.      
 

 3 
5. On October 6, 2015, a covered associate
2
 of Respondent (the “Covered Associate”) 
made a $1,000 campaign contribution to the Governor of Ohio.
3
  After the contribution was made, 
the Covered Associate sought and received the return of the contribution.      
 
6. The office of Governor of Ohio had the ability to influence the selection of 
investment advisers for STRS.  Specifically, the Governor of Ohio appoints one member of the 
board of STRS.  The STRS board has influence over investments by STRS and the selection of 
investment advisers and pooled investment vehicles for the pension fund. 
 
 7. The Respondent continues 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.    
                                         
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
  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 

 4 
9. As a public pension plan, STRS 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 individual who received the contribution was an official as 
defined in Advisers Act Rule 206(4)-5(f)(6) of a government entity because the office that the 
person was associated with had authority to appoint people who could 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 Sections 3(c)(1) or 3(c)(7) of the Investment Company Act.     
 
10. Under Advisers Act Rule 206(4)-5, the contribution triggered a two-year “time-out” 
on Respondent providing advisory services to STRS for compensation.  During the two years after 
the contribution, Respondent continued to provide advisory services for compensation to the Funds 
and, therefore, received advisory fees attributable to the investment of STRS in the Funds.  
 
D. VIOLATIONS 
  
 11. As a result of the conduct described above, Respondent Lime Rock 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 Lime Rock’s Offer. 
 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 
ORDERED that: 
                                                                                                                                   
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.  
 
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 
  A. Respondent Lime Rock 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 Lime Rock is censured. 
 
 C. Respondent Lime Rock shall, within 10 days of the entry of this Order, pay a civil 
money penalty in the amount of $75,000 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 Lime Rock 
Management LP 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 

 6 
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. 
 
 
 
 
       Brent J. Fields  
       Secretary  

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 
 

INVESTMENT ADVISERS ACT OF 1940 

Release No.  4611 / January 17, 2017 

 

ADMINISTRATIVE PROCEEDING 

File No.  3-17782 
 

 
In the Matter of 
 

LIME ROCK MANAGEMENT LP,  
 

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 Lime Rock Management LP (“Lime Rock” 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: 

                                         
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 

A. SUMMARY 

 

1. These proceedings involve a violation of the Commission’s “pay-to-play” rule for 

investment advisers by Respondent Lime Rock, an investment adviser to private equity funds 

which invest in energy 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 fund 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 October 2015, a covered associate of Respondent made a campaign contribution 

to an elected official in Ohio, who had influence over selecting investment advisers for a public 

pension plan in Ohio.  Within two years of this contribution, Respondent provided advisory 

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

compensation within two years of this contribution, Respondent violated Section 206(4) of the 

Advisers Act and Rule 206(4)-5 thereunder. 

 

B. RESPONDENT 

 

 3. Lime Rock Management LP is a limited partnership headquartered in Westport, 

Connecticut.  Lime Rock is registered with the Commission as an investment adviser.  As of 

December 31, 2015, Lime Rock had assets under management of $5.3 billion. 

 

C. BACKGROUND  

 

 4. In 2004, the State Teachers’ Retirement System of Ohio (“STRS”), a public 

pension plan in Ohio, committed to invest, and subsequently invested, approximately $30 million 

in Lime Rock Partners III, L.P., a private equity fund advised by Respondent.  In 2006, STRS 

committed to invest, and subsequently invested, approximately $43 million in Lime Rock Partners 

IV, L.P., a private equity fund advised by Respondent.  In 2008, STRS committed to invest, and 

subsequently invested, approximately $75 million in Lime Rock Partners V, L.P., a private equity 

fund advised by Respondent (the “Funds”).  During all relevant times, STRS 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 fund.      

 



 3 

5. On October 6, 2015, a covered associate
2
 of Respondent (the “Covered Associate”) 

made a $1,000 campaign contribution to the Governor of Ohio.
3
  After the contribution was made, 

the Covered Associate sought and received the return of the contribution.      

 

6. The office of Governor of Ohio had the ability to influence the selection of 

investment advisers for STRS.  Specifically, the Governor of Ohio appoints one member of the 

board of STRS.  The STRS board has influence over investments by STRS and the selection of 

investment advisers and pooled investment vehicles for the pension fund. 

 

 7. The Respondent continues 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.    

                                         
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
  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 



 4 

9. As a public pension plan, STRS 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 individual who received the contribution was an official as 

defined in Advisers Act Rule 206(4)-5(f)(6) of a government entity because the office that the 

person was associated with had authority to appoint people who could 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 Sections 3(c)(1) or 3(c)(7) of the Investment Company Act.     

 

10. Under Advisers Act Rule 206(4)-5, the contribution triggered a two-year “time-out” 

on Respondent providing advisory services to STRS for compensation.  During the two years after 

the contribution, Respondent continued to provide advisory services for compensation to the Funds 

and, therefore, received advisory fees attributable to the investment of STRS in the Funds.  

 

D. VIOLATIONS 

  

 11. As a result of the conduct described above, Respondent Lime Rock 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 Lime Rock’s Offer. 

 

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

ORDERED that: 

                                                                                                                                   
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.  

 
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 

  A. Respondent Lime Rock 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 Lime Rock is censured. 

 

 C. Respondent Lime Rock shall, within 10 days of the entry of this Order, pay a civil 

money penalty in the amount of $75,000 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 Lime Rock 

Management LP 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 



 6 

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. 

 

 

 

 

       Brent J. Fields  

       Secretary