WASHINGTON (CN) - Ranieri Partners and a former managing partner will pay $450,000 to settle charges that the partner, an unregistered broker, illegally solicited more than $500 million for the firm, the SEC said in court.
The SEC sued Ranieri Partners and its former senior managing partner William M. Stephens, 60, of Hinsdale, Ill., in a cease and desist order imposing sanctions.
"In anticipation of the institution of these proceedings, the Respondents have submitted Offers of Settlement (the 'Offers'), which the Commission has determined to accept," the SEC order says.
In a statement announcing the settlement, the SEC said the defendants "violated securities laws when soliciting more than $500 million in capital commitments for private funds managed by the firm."
According to the cease and desist order: "From February 2008 through March 2011, William M. Stephens ('Stephens') operated as an unregistered broker in violation of Section 15(a) of the Exchange Act. While working as an independent consultant for Ranieri Partners, Stephens actively solicited investors on behalf of private funds managed by Ranieri Partners' affiliates and, in return, received transaction-based compensation totaling approximately $2.4 million. Stephens' solicitation efforts included: (1) sending private placement memoranda, subscription documents, and due diligence materials to potential investors; (2) urging at least one investor to consider adjusting its portfolio allocations to accommodate an investment with Ranieri Partners; (3) providing potential investors with his analysis of Ranieri Partners' funds' strategy and performance track record; and (4) providing potential investors with confidential information relating to the identity of other investors and
their capital commitments. By these actions, Stephens engaged in the business of effecting transactions in securities without first being registered as a broker or dealer or associated with a registered broker or dealer. Ranieri Partners and Donald W. Phillips ('Phillips'), its then Senior Managing Partner, provided Stephens with key documents and information related to Ranieri Partners' private equity funds and did not take adequate steps to prevent Stephens from having substantive contacts with potential investors."
Ranieri Partners will pay $375,000 and Stephens will pay $75,000, the SEC said.