The SEC has sued Adit Ventures and its chief executive over pre-IPO fund stakes, and the defendants settled the same day without the amount being decided
The largest single investment Adit Ventures Management ever received was more than $15m, and the Securities and Exchange Commission says a false statement is what brought it in.
The defendants have already settled. Without admitting the allegations, Eric Munson and four Adit entities consented on Monday to the entry of a judgment permanently barring them from further violations of the provisions charged. What they will pay has not been decided. The complaint asks for disgorgement, prejudgment interest and civil penalties, and the settlement leaves the amount to the court, on a later motion by the Commission.
That is an unusual shape for a case this detailed: 49 pages, filed and resolved in the same afternoon, with the number left blank.
What the Commission alleges
The complaint, filed in the Southern District of New York as case 1:26-cv-06800, covers the period from at least April 2019 through December 2024. It alleges that Munson, acting through Adit Ventures Management and three general partner entities, sold interests in private funds that bought shares in companies before they went public.
In the autumn of 2020, the Commission alleges, Munson told an investor that a vehicle called Fika Holdings SPV III owned 32,000 shares of Klarna. It did not. The investor committed more than $15m. In a second example the complaint alleges an investor put in $5m after being told Munson would invest $5m of his own money alongside it.
Klarna and SpaceX appear in the complaint as the companies whose shares the funds were buying. Neither is a defendant and neither is accused of anything.
The markup
The mechanism the Commission describes is the part worth reading twice.
A general partner would buy shares in a target company, sometimes with money borrowed from a fund it advised, on terms the complaint says were not authorised by the fund agreements and rarely disclosed. It would then cause a client fund to buy those same shares at a higher price. The difference stayed with the defendants. In many instances, the complaint alleges, the reported "Original Purchase Price" shown to investors was inflated to cover the markup, and an "Acquisition Fee" was charged on top, including where a side letter had said no such fee would be charged.
One worked example is dated. In July 2021 a fund acquired an interest equivalent to about 13,100 SpaceX shares at around $420 each, part funded by $1.2m borrowed from another fund, and that interest was then assigned at cost to the general partner.
Registration, and why the complaint bothers to mention it
Adit Ventures Management did not register as an investment adviser until March 2024. The Commission alleges it filed a Form ADV in March 2023 claiming an exemption it did not qualify for.
The complaint spells out why that matters rather than leaving it as a technical count. An unregistered adviser is not subject to the SEC's regular examinations.
Munson has also agreed to an associational bar, with the right to apply to come back after three years. Corey A. Schuster, who runs the Enforcement Division's asset management unit, said in the announcement that advisers are entrusted with acting in their clients' best interests. The Commission thanked the Jersey Financial Services Commission for its help.
