UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940

Release No. 5319 / August 13, 2019

ADMINISTRATIVE PROCEEDING

File No. 3-19334

In the Matter of

MVP MANAGER LLC,

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 203(e) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS AND 

A CEASE-AND-DESIST ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against MVP Manager LLC (“MVP” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-And-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of 

the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below.
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III.

On the basis of this Order and Respondent’s Offer, the Commission finds that:

Summary

These proceedings arise out of MVP personnel’s receipt of brokerage commissions from 

counterparties to certain transactions with MVP’s advisory-client funds without adequate

disclosure to those MVP clients or to investors in the client funds. MVP’s clients are private 

funds that it formed to invest in venture-backed companies that have not yet conducted an initial 

public offering (“pre-IPO companies”) that MVP projects have a potential for liquidity within 

two to five years by sale or public listing. In three instances, MVP personnel arranged to receive 

a brokerage commission from the counterparty that was selling pre-IPO company securities to 

MVP’s advisory client. The arrangement created a potential or actual conflict of interest for 

MVP in advising its client funds, which MVP failed to adequately disclose.

Respondent

MVP, which previously did business as MVP OF Manager LLC, is a Delaware limited 

liability company with its principal place of business in New York, New York. MVP files

reports with the Commission as an exempt reporting adviser, reporting that it qualifies for 

exemption from registration because it acts as an adviser to private funds and has assets under 

management of less than $150 million. MVP is the investment adviser to and manager of MVP 

Opportunity Fund LLC (“Fund I”) and the MVP Opportunity Fund II LLC (“Fund II,” and 

together with Fund I, the “Funds”). The Funds are limited liability companies that offer interests 

to investors by series, with each series investing in a single pre-IPO company and remaining 

segregated from all other series. At all relevant times, principals of MVP and other personnel 

also operated an office of supervisory jurisdiction of a registered broker-dealer (the “Broker”). 

These MVP personnel were registered representatives of the Broker, and a principal of MVP was 

the supervisor of the office of supervisory jurisdiction.

Background

1. As the manager of and investment adviser to the Funds, MVP’s practice was to 

form a new series of interests in one of the Funds, conduct an offering of that series, and invest 

the proceeds in shares of a specified pre-IPO company—typically by advising, negotiating, and 

arranging for the fund to enter into a stock purchase agreement with a secondary market seller.

2. MVP provided prospective investors with a Fund I or Fund II private placement 

memorandum (“Fund PPM”) and a PPM series supplement (“Series Supplement”) specific to the 

series of the Fund that was then being offered to the investor. The Fund PPM described the 

series structure of the Fund, its management, general conflicts and risks, and that a Series 

Supplement would describe the terms applicable to that series. Each Series Supplement 

disclosed the specific pre-IPO company in which that series would invest and the fees and 

expenses that would be payable in connection with the series. The Series Supplement disclosed 

the amounts of two types of up-front, one-time fees that would be paid out of the series offering 

proceeds: a two percent “management fee” to MVP and a six percent “placement fee” to the 
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Broker, which ultimately would be paid out to MVP personnel in their capacities as registered 

representatives of the Broker. It also disclosed payments that would be made at the conclusion 

of the investment of the actual expenses attributable to the series and an eight percent carried 

interest distribution to MVP.

MVP Personnel Received Additional Undisclosed Compensation in Certain Instances

3. Between January 2015 and January 2016, in connection with advising on the

purchase of pre-IPO securities by three different series of the Funds, MVP personnel, including 

its principals, had dual roles with respect to MVP’s client Funds. The MVP personnel 

represented each seller in their capacities as registered representatives of the Broker, and they 

received a brokerage commission from the seller out of the gross sales proceeds that the Fund 

paid to the seller. This arrangement created a conflict of interest for MVP in advising the Funds

to purchase the securities from the seller.

4. In two of the three instances, MVP personnel arranged for the counterparty seller 

to retain the Broker, using agreements that specified both the price at which the shares would be 

sold and a per-share commission payable to the Broker out of the gross sales proceeds. The third 

instance was substantially similar, except it involved a commission sharing arrangement between 

the Broker and another unrelated broker. All three agreements (the “Counterparty Commission 

Agreements”) were executed by a principal of MVP, acting in his capacity as a principal of the 

Broker. In each instance, the Counterparty Commission Agreements resulted in the seller 

agreeing to receive a net purchase price that was 3-4% lower than the gross purchase price paid 

by the buyer Fund. These Counterparty Commission Agreements created an actual or potential 

conflict of interest for MVP in acting as an investment adviser to the relevant Fund. 

5. The Funds did not have an investor committee or other independent entity that 

was authorized to approve any conflicts of interest on their behalf. Although MVP personnel 

were also simultaneously soliciting investors who might be interested in investing in the Fund 

series offering and advising the relevant Fund on investing the proceeds of such an offering, 

none of the disclosure documents provided to investors revealed the existence of the relevant 

Counterparty Commission Agreement or MVP’s attendant conflicts of interest.

6. When MVP found a sufficient number of investors to invest in the new series of 

the relevant Fund series offering, it closed on the transactions. The investors purchased interests 

in the series of the relevant Fund, and the series offering proceeds were used to purchase the preIPO Company securities at the gross purchase price that MVP had arranged with the seller

pursuant to the relevant Counterparty Commission Agreement. The seller paid the brokerage 

commission to the Broker out of the gross purchase price it received from the Fund, and the 

Broker then paid the commission out to MVP personnel, including MVP’s principals.

7. For example, in approximately December 2014, MVP personnel began to form 

and prepare an offering of Series D-2 of Fund I for the purpose of purchasing securities interests 

in a certain pre-IPO company (“Company A”). The purchase of Company A securities involved 

several interrelated steps by MVP and its personnel:
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a. At approximately the same time as the Series D-2 offering was being 

prepared, MVP personnel, including its principals, engaged in negotiations with a 

potential counterparty (“Counterparty-1”). The negotiations included entering into a 

Counterparty Commission Agreement between Counterparty-1 and the Broker providing 

that the Broker would be engaged to “assist” with the direct or indirect sale of Company 

A securities at a gross purchase price of $7.15 per share, with payment of a commission 

equal to $0.22 per share to the Broker, resulting in a per share price to Counterparty-1 of 

$6.93 per share. As stated in an email to Counterparty-1 by a principal of MVP in early 

January 2015, “I want to make sure we are clear on the economics. MVP will be 

[indirectly buying] shares of [Company A] at $7.15. [Counterparty-1] will pay [the 

Broker] $0.22 per share for identifying this buyer. I will prepare a fee agreement to this 

effect. That leaves $6.93 per share for [Counterparty-1]....” 

b. The Series D-2 Fund I supplement provided to prospective investors in 

early January 2015 specified that the Fund intended to purchase Company A securities 

for a maximum average purchase price of $7.15 per share, and disclosed the following 

fees: (i) an up-front, one-time two percent “management fee” to MVP; (ii) an up-front, 

one-time six percent “placement fee” to the Broker, which ultimately would be paid out 

to MVP personnel in their capacities as registered representatives of the Broker; and (iii) 

payments, at the conclusion of the investment, of the actual expenses attributable to the 

series and an eight percent carried interest distribution to MVP. None of the disclosure 

documents revealed the existence of the Counterparty Commission Agreement, that MVP 

personnel arranged to receive of $0.22 per share in commissions out of the $7.15 

purchase price per share (approximately 3.1% of the purchase price), or MVP’s attendant 

conflicts of interest. 

c. Once sufficient investor funds had been raised for the Series D-2 Fund I 

offering, MVP, as the adviser to Fund I, closed on the securities purchase agreement

between Fund I and Counterparty-1 relating to 435,742 shares of Company A at a price 

of $7.15 per share, for a total of $3,115,555.30. Out of the gross proceeds, 

Counterparty-1 paid the commission set forth in the Counterparty Commission 

Agreement of $0.22 per share for a total of $95,863.20 to the Broker (approximately 

3.1% of the purchase price). The Broker in turn remitted the commission to MVP 

personnel. 

8. The other two instances involved substantially similar arrangements:

a. In approximately July 2015, MVP advised Series EE-1 of Fund II in the 

purchase of 416 shares of a certain pre-IPO company (“Company B”) from a 

counterparty (“Counterparty-2”) at a purchase price of $1,945 per share for a total of 

$809,120, while arranging a Counterparty Commission Agreement under which the 

Broker received a commission of $30,255.68 out of the proceeds (approximately 3.7% of 

the purchase price paid by Fund II).

b. In approximately December 2015, MVP advised Series EE-2 of Fund II in 

the purchase of 315 shares of Company B at a purchase price of $1,900 per share for a 
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total of $598,500, while arranging a Counterparty Commission Agreement under which 

the Broker received a commission of $23,940 out of the proceeds (approximately 4% of 

the purchase price paid by Fund II).

9. The net effect of these transactions was that MVP and its personnel were paid, 

either directly or through the Broker, up-front fees of between eleven and twelve percent, rather 

than the disclosed eight percent. The Counterparty Commission Agreements created an 

undisclosed potential or actual conflict of interest because MVP and its personnel had an 

economic incentive to recommend that the Funds purchase the securities at the prices it 

negotiated with the counterparties, which would trigger their receipt of commissions through the 

Broker.

10. None of the disclosure documents revealed the existence of the relevant 

Counterparty Commission Agreement or MVP’s attendant conflicts of interest. The Series 

Supplement—which provided the definitive details on fees and expenses for the series—made no 

mention of the arrangement. Although the more general Fund PPM disclosed as a “potential” 

conflict of interest that the Broker “may receive a placement agency fee or brokerage commission 

in connection with the purchase of securities of Portfolio Companies ... [,] provided, however, that 

such placement agency fee or brokerage commission will be paid only by the seller of such 

securities and not by the Fund,” this was not adequate given the actual arrangements in the 

Counterparty Commission Agreements. Nor did MVP disclose these facts orally to investors. As 

a result, MVP failed to adequately disclose the Counterparty Commission Agreements and the 

attendant conflicts created, and due to its conflict, could not consent on behalf of the Funds.

Violations

11. Section 206(2) of the Advisers Act prohibits investment advisers from directly or 

indirectly engaging “in any transaction, practice, or course of business which operates as a fraud or 

deceit upon any client or prospective client.” A violation of Section 206(2) of the Advisers Act 

may rest on a finding of simple negligence. SEC v. Steadman, 967 F.2d 636, 643 n.5 (D.C. Cir. 

1992) (citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195 (1963)). Proof of 

scienter is not required to establish a violation of Section 206(2) of the Advisers Act. Id. As a 

result of the conduct described above, MVP willfully1violated Section 206(2) of the Advisers Act.

12. Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder make it unlawful 

for any investment adviser to a pooled investment vehicle to “make any untrue statement of a 

material fact or to omit to state a material fact necessary to make the statements made, in the light 

of the circumstances under which they were made, not misleading, to any investor or prospective 

investor in the pooled investment vehicle” or to “engage in any act, practice, or course of business 

that is fraudulent, deceptive, or manipulative with respect to any investor or prospective investor in 

 

1 A willful violation of the securities laws means merely “‘that the person charged with the 

duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting 

Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor

“‘also be aware that he is violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. 

v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)).
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the pooled investment vehicle.” Proof of scienter is not required to establish a violation of Section 

206(4) of the Advisers Act or the rules thereunder. Steadman, 967 F.2d at 647. As a result of the 

conduct described above, MVP willfully violated Section 206(4) of the Advisers Act and Rule 

206(4)-8 thereunder.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondent MVP’s Offer.

Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 

ORDERED that:

A. Respondent MVP cease and desist from committing or causing any violations and 

any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 

promulgated thereunder.

B. Respondent MVP is censured.

C. MVP shall, within 21 days of the entry of this Order, pay disgorgement of 

$150,058.88, prejudgment interest of $19,681.42, and a civil money penalty in the amount of 

$80,000 to the Securities and Exchange Commission. If timely payment of disgorgement and 

prejudgment interest is not made, additional interest shall accrue pursuant to SEC Rule of 

Practice 600. If timely payment of the civil money penalty is not made, additional interest shall 

accrue pursuant to 31 U.S.C. §3717.

Payment must be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request; 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

MVP as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
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the cover letter and check or money order must be sent to Sanjay Wadhwa, Senior Associate 

Regional Director, Division of Enforcement, Securities and Exchange Commission, New York 

Regional Office, 200 Vesey St., Suite 400, New York, NY 10281. 

D. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a Fair 

Fund is created for the disgorgement, prejudgment interest, and penalties referenced in paragraph

C above. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action”

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.

By the Commission.

Vanessa A. Countryman

Secretary