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Investment firm agrees to pay $800K in settlement with state

March 4, 2022 GMT

CONCORD, N.H. (AP) — The founder of an investment company has agreed to pay $800,000 in a settlement with the state of New Hampshire over misleading statements about fund management fees, commingling assets with funds and not filing required documents, state regulators said Friday.

The settlement was reached between the New Hampshire Bureau of Securities Regulation, Manchester-based Alumni Ventures Group that creates and manages multiple venture capital funds, and its founder and CEO, Michael Collins.

The bureau received a complaint in 2018 from an investor who expected a 2% management fee for 10 years, plus a 20% share in profits on any profitable investments for a fund, the industry standard. But instead, he paid a fee of 20% up front in the first year.

AVG typically spent most of the upfront management fee in that first year of the fund’s operations, the bureau said.

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“Investors didn’t understand that their investment money was being depleted up front to operate AVG which left less investor money to be put to use on behalf of the fund and its investors. This was a material misrepresentation,” Jeff Spill, the bureau’s deputy director, said in a statement.

AVG has since repaid the affected funds $4,791,401 in interest, the bureau said.