# In re Ranieri Partners LLC & Donald W. Phillips (2013)

- **Primary source (archived PDF):** [`sec-ranieri-partners-2013.pdf`](./sec-ranieri-partners-2013.pdf)
- **Source URL:** https://www.sec.gov/litigation/admin/2013/34-69091.pdf
- **Pinpoint cite:** In re Ranieri Partners LLC & Donald W. Phillips, Exchange Act Release No. 69091, Investment Advisers Act Release No. 3563, Admin. Proc. File No. 3-15234 (Mar. 8, 2013) (Order Instituting Administrative and Cease-and-Desist Proceedings)
- **Retrieved-date:** UNKNOWN (do not fabricate)
- **Status:** primary-archived (8-page PDF verified as the settled SEC order, not a nav shell or bot challenge)

## Why it matters for the creator platform

This is the load-bearing enforcement precedent for the rule that **transaction-based compensation paid to an unregistered person for soliciting investors = unregistered-broker activity under Exchange Act Section 15(a)**. It reaches not only the finder (Stephens) but the firm and the individual (Ranieri Partners, Phillips) who paid the finder, gave him deal documents, and failed to police his investor contact. Directly on point for any structure that would pay a CREATOR a cut tied to capital raised / investments closed, or that hands a creator PPMs/subscription docs to push to their audience.

## Key sections flagged

### Holding — transaction-based comp for solicitation is broker activity (Section III, Summary, p.2)
> "From February 2008 through March 2011, William M. Stephens ('Stephens') operated as an unregistered broker in violation of Section 15(a) of the Exchange Act. While working as an independent consultant for Ranieri Partners, Stephens actively solicited investors on behalf of private funds managed by Ranieri Partners' affiliates and, in return, received transaction-based compensation totaling approximately $2.4 million."

> "By these actions, Stephens engaged in the business of effecting transactions in securities without first being registered as a broker or dealer or associated with a registered broker or dealer. Ranieri Partners and Donald W. Phillips ('Phillips'), its then Senior Managing Partner, provided Stephens with key documents and information related to Ranieri Partners' private equity funds and did not take adequate steps to prevent Stephens from having substantive contacts with potential investors."

### The comp was a percentage of capital raised (Section III ¶¶6, 15, 16, pp.3, 5)
> "Ranieri Partners agreed to pay Stephens a fee equal to 1% of all capital commitments made to the Selene Funds by investors introduced by Stephens." (¶6)

> "Pursuant to a new agreement negotiated between Stephens and Phillips, Ranieri Partners was to pay Stephens a fee equal to 0.3% of State Retirement System X's capital commitments, or approximately $822,000." (¶15)

> "In total, investors introduced to Ranieri Partners by Stephens and/or his subagent committed $569 million to funds managed by Ranieri Partners, earning Stephens $3.772 million in fees. Ranieri Partners paid Stephens $2.4 million of the fees he earned." (¶16)

### Conduct that crossed from "finder" into "broker" — the solicitation prongs (Section III, Summary, p.2)
> "Stephens' solicitation efforts included: (1) sending private placement memoranda, subscription documents, and due diligence materials to potential investors; (2) urging at least one investor to consider adjusting its portfolio allocations to accommodate an investment with Ranieri Partners; (3) providing potential investors with his analysis of Ranieri Partners' funds' strategy and performance track record; and (4) providing potential investors with confidential information relating to the identity of other investors and their capital commitments."

### Liability of the firm/individual who paid and enabled the finder (Section III ¶¶18, 20, Violations ¶¶21–22, p.6)
> "Ranieri Partners failed to adequately oversee Stephens' activities. Although Stephens was not permitted to send documents like PPMs and subscription agreements to potential investors, he was able to obtain such documents from Ranieri Partners, as Ranieri Partners failed to limit Stephens' access to key documents." (¶18)

> "Phillips assisted Stephens' in his solicitation efforts by providing Stephens with key fund documents and information. Phillips also failed to limit Stephens' activities despite knowing that Stephens was supposed to play a limited role in introducing potential investors. Further, Phillips eventually became aware that Stephens was having substantive communications with potential investors, yet he still failed to do anything to curb Stephens' activities." (¶20)

> "As a result of the conduct described above, Ranieri Partners caused Stephens' violations of Section 15(a) of the Exchange Act, which requires persons engaged in the business of effecting transactions in securities to be registered as a broker or dealer or associated with a registered broker or dealer." (¶21)

> "As a result of the conduct described above, Phillips willfully aided and abetted and caused Stephens' violations of Section 15(a) of the Exchange Act." (¶22)

### Sanctions imposed (Section IV, pp.7–8)
> "Respondent Ranieri Partners shall, within 30 days of the entry of this Order, pay a civil money penalty of $375,000 to the United States Treasury." (IV.A.2)

> "Respondent Phillips be, and hereby is, suspended from association in a supervisory capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization for a period of nine (9) months... [and] shall, within 30 days of the entry of this Order, pay a civil money penalty of $75,000 to the United States Treasury." (IV.B.2–3)