The Securities and Exchange Commission (SEC) today announced charges against registered investment adviser Twenty Acre Capital LP for misleading rather than fair and balanced performance advertising.
Pursuant to the SEC mandate, from at least November 2021 through February 2023, when advertising to prospective investors the performance of a private fund that it advised, Twenty Acre presented performance returns experienced by a single investor that did not constitute performance of the mutual fund.
As set out in the order, Twenty Acre’s advertisements failed to disclose that this investor’s performance, from time to time, differed materially from and was significantly higher than the fund’s overall performance and the returns achieved by other investors in the fund due to investment restrictions certain rules of FINRA, including rules prohibiting certain persons from purchasing securities in initial public offerings.
The SEC order finds that Twenty Acre violated the anti-fraud provisions of Section 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-1(a) (commonly known as the marketing rule) and 206(4)-8 below.
Without admitting or denying the SEC’s findings, Twenty Acre agreed to a cease and desist and censure order. Twenty Acre will also pay a civil penalty of $100,000.