SEC Charges Venture Capital Adviser Energy Innovation Capital Management for Overcharging Fees
The Securities and Exchange Commission today charged Energy Innovation Capital Management, LLC (EIC), a California-based exempt reporting adviser, with charging excess management fees from two venture capital funds. EIC has returned $678,681 plus interest to the funds and their limited partners, and has agreed to settle the SEC’s charges by paying a $175,000 penalty. According to the SEC’s order, EIC’s limited partners hip agreements for the two venture capital funds allow it to charge management fees during certain times based on the funds’ invested capital in individual portfolio company securities, and require EIC to reduce the basis for these fees if certain events occur, such as write-downs of such securities. The order finds that, from January 16, 2020, through March 31, 2022, EIC overcharged management fees by making a number of errors in its favor. As the order states, the errors include: Failing to make adjustments to its management fee calculations for individual port...