SEC Hits RIA With $100K Marketing Rule Fine

“Twenty Acre provided these materials directly to prospective investors as attachments to email communications and routinely uploaded the materials to third-party databases that prospective investors were able to access,” according to the order.

“When advertising the Fund’s performance in these materials, Twenty Acre presented performance returns that were experienced by a single limited partner that had invested in the Fund at inception and was eligible for all Fund investments,” the SEC said.

This investor’s performance was presented to prospective investors as the fund’s performance.

According to the order, “the investor’s performance, at times, differed substantially from, and was significantly higher than, the Fund’s performance, because certain successful IPO investments the Fund had made were credited to the investor’s capital account in greater proportion than other investors’ capital accounts.”

These other investors in the fund, due to investment restrictions under FINRA Rules 5130 and 5131, were unable to participate fully in the IPO investments.

Beginning in January 2022, Twenty Acre presented as the fund’s returns “the positive 44.8% net performance that the single investor achieved in 2021, whereas the undisclosed net performance of the Fund was negative 5.7% in 2021,” the SEC said.

Further, “on the first substantive page of the pitch decks, Twenty Acre presented performance results, such as the positive 44.8% return for 2021, under the heading ‘FUND OVERVIEW,’ without an accompanying qualification or disclaimer on that page suggesting such results were anything other than performance results of the Fund,” the SEC said.