Angelo, Gordon & Co.’s AG Capital Recovery Partners VIII Relies on Placement Agent Fined by FINRA, NASD, and NASDAQ, Reports UNITE HERE

CHICAGO--(BUSINESS WIRE)--Angelo, Gordon & Co. in December 2013 launched fundraising for AG Capital Recovery Partners VIII.¹ A new report by UNITE HERE looks at marketers that Angelo, Gordon & Co. has reported using for the fund. Report is available at www.PECloserLook.org.

In its March 2014 form ADV, Angelo, Gordon & Co. disclosed that it was relying on multiple marketers or placement agents to help raise money for AG Capital Recovery Partners VIII: BTIG LLC, Intercapital Securities Inc., and Jerrod Stelli.²

In the past several years, one of the placement agents Angelo, Gordon & Co. reported using to help raise AG Capital Recovery Partners VIII, San Francisco-based securities broker BTIG LLC, has been censured and fined multiple times by the Financial Industry Regulatory Authority (FINRA), the National Association of Securities Dealers (NASD), and the NASDAQ Stock Market.³

Since 2007, BTIG LLC has been censured seven times by FINRA, the NASD, or the NASDAQ Stock Exchange and has agreed to pay more than $142,000 in fines for its actions. Issues cited in the various Letters of Acceptance, Waiver, and Consent have included failing to have an adequate supervisory system in place⁴, failing to disclose information to clients or disclosing incorrect information to clients⁵, failing to disclose information to regulators or disclosing incorrect information to regulators⁶, and accepting and executing unsolicited customer orders to purchase and sell options prior to submitting an application to do so.⁷

While all of its violations relate to public securities or exchanges, they raise questions about how BTIG will act in the much more opaque and loosely-regulated world of private equity fundraising.

“The firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations, and/or NASD rules addressing quality of market topics,” noted an October 27, 2010 FINRA Letter of Acceptance, Waiver, and Consent re BTIG, LLC.

Questions:

• Given the large number of marketers available, why is AG Capital Recovery Partners VIII relying on a placement agent that has been censured and fined several times by regulators?
• What type and geography of investors is BTIG LLC focused on raising capital from for AG Capital Recovery Partners VIII?
• Given Angelo, Gordon & Co.’s long track record of raising distressed debt funds (e.g. AG Capital Recovery Partners I-VII), why is the manager relying on three separate placement agents to help raise Fund VIII?

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^1	AG Capital Recovery Partners VIII SEC Form D, Dec 30, 2013.
^2	Angelo, Gordon & Co. SEC Form ADV, Mar 31, 2014.
^3	FINRA BrokerCheck report re BTIG LLC, Apr 5, 2014.
^4	FINRA Letter of Acceptance, Waiver, and Consent, Oct 27, 2010.
^5	FINRA Letter of Acceptance, Waiver, and Consent, Oct 27, 2010.
^6	FINRA Letter of Acceptance, Waiver, and Consent, Apr 9, 2012.
^7	NASD Letter of Acceptance, Waiver, and Consent, March 7, 2007.