SEC fines VC firm backed by EI and Isif

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SEC fines VC firm backed by EI and Isif



Enterprise Ireland said it is to review the case of a US venture capital firm which has invested on behalf of the Irish State agency, and has been fined by American regulators over a political donation.

The State body, which supports Irish exporters, invested in a fund managed by the firm a number of years ago, as did the National Pensions Reserve Fund (NPRF).

The firm in question, US-based Sofinnova Ventures, has accepted a fine for “pay-to-play” violations in relation to the fund.

Sofinnova submitted an offer of settlement, which included the fine, to the US Securities and Exchange Commission (SEC), the body that enforces the laws relating to financial securities.

The SEC said that in 2014 an associate at Sofinnova had made a political donation to Bruce Rauner, who was running for governor of Illinois. Mr Rauner won the race and as governor had influence over selecting investment advisers for public pension plans.

At the time of the donation, a Sofinnova fund known as Sofinnova Venture Partners VIII was managing money on behalf of one such public pension plan called the Illinois Teachers’ Retirement System (TRS). Enterprise Ireland and the NPRF had also put money into the Sofinnova fund – $25m and $12.5m respectively.

The political donation was made shortly before TRS committed more money to another Sofinnova fund.

The law says that after the political donation was made, Sofinnova was supposed to stop providing investment advisory services to government entities for a period of two years, but it continued to manage both funds, containing the public pension money, for financial compensation.

There is no suggestion of any wrongdoing in relation to the Enterprise Ireland and NPRF investments in the fund.

ISIF, the successor to the NPRF, declined to comment. Enterprise Ireland said it would review the matter.

They invested in the $440m fund because it was designed to back life sciences companies both here and in the US. Richard Bruton, then the jobs minister, said at the time that he looked forward to “welcoming the Sofinnova team to Ireland and connecting them with the best life sciences companies in Ireland”.

“Healthcare and life sciences is a sector which the Government has identified as having potential for high levels of employment growth, and today’s announcement will mean that more high-growth Irish companies can meet this leading life sciences fund,” he said. In its ruling, the SEC said that Sofinnova was being censured and had to pay a $120,000 fine.

Irish Independent

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