SQN Capital Management Settles with SEC and Exits Advisory Business
SQN Capital Management LLC and its sole remaining partner, Jeremiah Silkowski, have reached a voluntary settlement with the U.S. Securities and Exchange Commission (SEC) to exit the investment advisory business. The agreement will lead to the wind-down of SQN's equipment leasing funds after years of subsidized operations due to illiquid assets like marine vessels. Investors in the two largest funds recovered between 51% and 65% of their initial capital through distributions, but liquidation was delayed for over five years by the pandemic. The SEC did not allege misuse of investor funds or personal gain from violations. The settlement includes no admission of wrongdoing. SQN maintained fund valuations based on potential exit opportunities that failed to materialize and used its own resources to subsidize operations during a period when cash flow was insufficient. Despite challenges, the firm made efforts such as attempting roll-up transactions and marketing assets for sale. SQN also facilitated redemptions primarily funded by itself due to limited liquidity in the funds. These redemptions were largely directed toward investors facing severe personal hardships. The SEC acknowledged that no secondary market existed during this period, meaning units could not be readily bought or sold.
Topics: equipment leasing funds wind-down investment advisory regulatory compliance