The European Venture Capital Association has written in support of the private placement industry in a letter to the Securities and Exchange Commission, currently accepting comments on its proposed rule that would see placement agents banned from interacting with public pensions.
“Policymakers are unlikely to deter unethical practices by outlawing legitimate market practice,” wrote EVCA secretary general Javier Echarri.
The institutional placement industry has a legitimate and crucial place in the market for stakeholders on both sides of the Atlantic.
The European trade body said it shares the SEC’s concerns about “pay-to-play” practices that “have no place in the market”. But, Echarri wrote, “we believe just as firmly that the institutional placement industry has a legitimate and crucial place in the market for stakeholders on both sides of the Atlantic and indeed globally.”
An outright ban, he continued, “is unwarranted and could prove damaging to all stakeholders”.
EVCA has pointed the SEC to its own code of conduct for placement agents, development of which was overseen by a task force chaired by placement firm MVision Private Equity Adviser’s Mounir Guen and comprised eight professionals from the industry.
The code sets out best practices, requiring members to adhere to “the highest standards of compliance and regulation and imposes requirements relating to transparency and accountability,” Echarri told the SEC.
The code’s was created after extensive consultation with US gatekeepers, US public pension funds and a wide range of EVCA members from the LP and GP communities, the trade body said
Please stop all this nonsense … Catch and punish the guilty, leave the innocent alone.
“In drafting, EVCA took into consideration draft and final policy legislation from a variety of sources including legislation under consideration, including legislation under consideration in the California legislature,” Echarri explained.
In addition to individual placement agents including MVision and CP Eaton, many general partners and limited partners have written to the SEC protesting the proposed ban.
One of the first letters submitted was from Ted Caroll, partner at lower mid-market, media-focused private equity firm Noson Lawen.
“Please stop all this nonsense,” Caroll wrote.”Placement agents provide a valuable service to small and midsized investment firms and 99.99 percent are honest diligent people. Its offensive to see the many large political donors involved in the recent pay-to-play schemes get to pay fines and adopt hollow policies to avoid real prosecution. Catch and punish the guilty, leave the innocent alone.”