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The Securities and Exchange Commission last week said that American Infrastructure Funds LLC, a California-based RIA to private funds, agreed to pay more than $1.6 million to settle charges. 

The charges stemmed from the firm’s “acceleration of portfolio company monitoring fees, for transferring a private fund asset from funds nearing the end of their term to a new fund, and for loaning money from one private fund to another private fund advised by an affiliate,” the SEC said in a statement.  

AIM “breached its fiduciary duty” to private funds that it advised by failing to adequately disclose its conflict of interest in receiving accelerated monitoring fees paid by a portfolio company when that portfolio company was sold, the regulator said. The SEC said AIM violated its duty of care by failing to consider whether the fee acceleration was in its clients’ best interests. 

“This case highlights our continued focus on holding private fund advisors responsible when they fail to act in their clients’ best interests, including with respect to continuation funds,” Corey Schuster, co-chief of the Enforcement Division’s Asset Management Unit, said. “Among other breaches, AIM failed to disclose its conflicts of interest when it transferred a client’s asset to a new fund."  

The SEC’s order finds that AIM violated antifraud and compliance provisions of the Advisers Act.  

Without admitting or denying the SEC’s findings, AIM agreed to a cease-and-desist order and censure, and to pay a $1.2 million penalty as well as $445,460 in disgorgement and prejudgment interest to investors.