The U.S. Securities and Exchange Commission (SEC) charged a venture advisory firm and its CEO on Monday for allegedly misleading investors to raise capital for its funds and misusing that capital. The defendants agreed to settle the allegations, but insist they did nothing wrong.
In a complaint filed in the U.S. district court for the Southern District of New York, the SEC alleged that New York-based Adit Ventures Management LLC, its CEO, Eric Munson, and three affiliated general partners (Adit Ventures LLC, Adit Ventures II LLC, and Adit Ventures III LLC) breached U.S. securities rules.
In its complaint, the SEC alleged that between April 2019 and December 2024, the defendants made “material misrepresentations” to prospective investors to induce them to invest and then misused that capital, “sometimes by misappropriating money directly and other times by taking unsecured loans from funds on terms favourable to defendants,” among other alleged misuses.
The defendants agreed to settle the SEC’s charges without admitting the allegations.
They consented to the entry of a judgment, which is subject to court approval, that imposes a permanent injunction against violating federal securities laws, and they agreed to pay disgorgement and a civil penalty, “in an amount to be determined by the court upon motion by the commission.”
In a statement, Munson indicated that he settled to avoid prolonged litigation, but “vehemently denies” the SEC’s allegations.
“I am settling this matter because fighting it will not result in any benefit for me or for the investors I have spent my professional life serving. It is not a concession that these charges have any merit whatsoever,” he said.