SEC v. Madison Capital Funding LLC - Investment Adviser Sanctions

The Securities and Exchange Commission (SEC) has initiated administrative and cease-and-desist proceedings against Madison Capital Funding LLC, an investment adviser registered with the SEC. The action stems from allegations that Madison Capital, between March and May 2020, failed to reasonably determine fair market value for principal trades conducted with pooled investment vehicles it advised. This practice allegedly contravened the firm's obligations under its advisory agreements and representations to investors, particularly during the market disruption caused by the COVID-19 pandemic.

Madison Capital has submitted an Offer of Settlement, which the SEC has accepted. The order, based on the settlement, imposes remedial sanctions and a cease-and-desist order. While the specific sanctions are not detailed in this excerpt, the implications for Madison Capital include potential penalties and restrictions on its advisory activities. Compliance officers should note the SEC's focus on fair valuation practices, especially during periods of market volatility, and the importance of adhering to stated advisory agreements and investor disclosures.