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Private Equity
aequitascapital.com

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Investments

14

Portfolio Exits

3

Funds

6

Partners & Customers

2

About Aequitas Capital Management

Aequitas Capital Management, founded in 1993, is an Oregon-based private equity firm specializing in buyout investments in small and middle market companies. It primarily invests in healthcare, manufacturing, services, and energy sectors.

Aequitas Capital Management Headquarter Location

5300 Meadows Road Suite 400

Lake Oswego, Oregon, 97035,

United States

503-419-3500

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Latest Aequitas Capital Management News

Advisor Fallout Continues in Aequitas Capital Management Ponzi Scheme

Mar 3, 2020

William Malloy III and Jeffrey Sica settle with the SEC. (Andrew Harrer/Bloomberg) There’s more fallout from the alleged $350 million Aequitas Capital Management Ponzi scheme, with two more investment advisors tied to the Lake Oswego, Oregon financial advisor settling charges with the Securities and Exchange Commission last week. The firms and their owners ¬– prominent La Jolla, Calif. investor William Malloy III, 43, and Morristown, New Jersey investment advisor and frequent financial media commentator Jeffrey Sica, 52 – were accused of failing to adequately disclose conflicts of interests to clients about their relationship with Aequitas, as were two prior advisors who settled similar charges in 2019. Altogether, four investor advisors outside of Aequitas have paid fines and disgorgement totaling more than $2.4 million to the SEC. They’ve also agreed to censure and cease and desist orders, and three of them received bans from the securities industry. Malloy and Sica and the firms they control “steered advisory clients to invest in Aequitas securities at the same time that Aequitas was compensating the firms through loans or for consulting services that included introducing investors to Aequitas,” according to the SEC release announcing the most recent settlements on Feb. 27. Neither advisor disclosed those conflicts to clients. Aequitas, which once claimed to manage $1.67 billion, began winding down its operations in 2016 after its sizable investments in the student loan debt of Corinthian Colleges tanked when the for-profit school filed for bankruptcy in 2015. Between 2014 and 2015, Aequitas had raised approximately $350 million from investors, according to the SEC’s 2016 fraud complaint. By that time, the new money being raised from investors was largely going to pay off prior investors, the SEC alleged. The SEC’s civil case is still pending against Aequitas and its principals — co-founder and CEO Robert Jesenik, co-founder and executive vice president Brian Oliver, and former CFO N. Scott Gillis — all of whom the SEC is seeking to bar from the industry and make restitution. Oliver and another former CFO, Olaf Janke, have pled guilty to criminal charges, and more criminal indictments are expected. But, as RIA Intel previously reported , the sophisticated investment fraud couldn’t have gone on as long as it did without the participation of other RIAs. To lure them, Aequitas lent money to those RIAs to grow their assets and offered them bond-like products bearing interest rates as high as 15 percent that supposedly involved little risk. Malloy’s ties to Aequitas go back to 2010, when he was named an executive vice president of Aequitas Capital Management. The next year Malloy founded a company called Fortress Investment Management — not to be confused with Fortress Investment Group (now part of SoftBank Group) — that entered into a consulting agreement with Aequitas, according to the SEC’s complaint. Then, in 2013 Malloy founded his investment advisor MWM 1835. Under its agreement with Aequitas, Fortress received $15,000 a month for introducing investors to Aequitas. And during 2014 and 2015, a fund run by Fortress, called Income Opportunity Capital, bought approximately $1 million of Aequitas Commercial Finance promissory notes at the direction of Malloy, MWM, and Fortress, the SEC said. Thirteen of Malloy’s clients were invested in the fund, which had invested more than 95% of its assets in the Aequitas notes. “The Fortress-ACM agreement incentivized Malloy, through his control of Fortress, to invest IOC in Aequitas, rather than other investments,” the SEC charged. While that created a conflict of interest, it added, “Malloy took no steps to disclose the agreement to investors.”  Some of those investors sued Malloy in California state court, claiming that their investment of $300,000 went into the Income Opportunity Capital fund, which they were told would pay 8% per year. Instead, they alleged that it went to Aequitas and its investments in Corinthian. The case has since been settled for an undisclosed amount, according to an attorney involved with the case. The SEC also alleged that Malloy aided and abetted the Aequitas fraud. Malloy agreed to pay the SEC $154,057 and is barred from the securities industry for 12 months. These days Malloy works through a family office called “Malloy and Company, which—according to its website--“provides capital and business expertise for private companies and real estate ventures. We foster innovation that drives positive change for the community and environment by focusing on the three key principles of authenticity, innovation and sustainability.” A spokesman for Malloy said “Fortress Investment Management and William Malloy III are pleased to end the process with a mutually agreed-upon settlement.” Meanwhile, Sica Wealth Management and its owner, Jeffrey Sica, will pay more than $400,000 to settle with the SEC. Neither of the men admitted nor denied the SEC’s findings. The SEC claims that Sica and “certain Aequitas officers had an understanding” that his firm would receive money from Aequitas, while Sica would recommend his clients invest in Aequitas securities. From October 2013 to March 2015, on Sica’s recommendation, approximately 45 of his firm’s advisory clients invested a total of more than $30 million in securities issued by Aequitas Commercial Finance, the SEC complaint says. At the same time, Aequitas paid his firm, Sica Wealth Management, and another advisor affiliated with Sica, approximately $2 million through consulting agreements and a loan agreement, according to the SEC. Sica allegedly failed to disclose those arrangements to clients, which created a conflict when he recommended buying the Aequitas securities. Sources familiar with Sica, however, say that the firm withdrew some $21 million of its investments shortly before Aequitas failed, and Sica has not been barred from the securities industry, even temporarily. Sica Wealth Management’s website showcases articles in such places as Barron’s, Fox Business, and U.S. News & World Report in which Jeff Sica is quoted discussing investments. “We are pleased to put this issue behind us and to have had the opportunity to resolve this matter,” Sica said in a statement. “Like many investors, we were deceived by Aequitas, and in 2015, when questions we raised about Aequitas’ financial position led to additional red flags, our firm immediately and proactively shifted its focus to protecting our investors and demanded that their money be returned. Importantly, there is no finding in the SEC Order indicating that Sica Wealth Management was aware of the fraud being committed by Aequitas against its investors.” Sica added that “in the half-decade since the SEC investigation was launched, our firm has taken significant steps to strengthen our controls environment, and have bolstered our compliance and operations teams with the addition of new staff and leadership to help ensure our level of diligence is as strong and robust as it can be.” The two other advisors who agreed last year to similar cease and desist orders, fines, and industry bars are Kristofor Behn of Foxboro, Mass.-based Fieldstone Financial Management and N. Gary Price of Gig Harbor, Wash., based-Genesis Capital. The SEC said these two also failed to disclose conflicts to their clients when recommending Aequitas securities. Behn was permanently banned from the securities industry, while Price was barred for a year. Oops, something went wrong

Aequitas Capital Management Investments

14 Investments

Aequitas Capital Management has made 14 investments. Their latest investment was in nCino as part of their Series D on August 8, 2017.

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Aequitas Capital Management Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

8/15/2017

Series D

nCino

$17.85M

Yes

2

2/1/2017

Series B - IV

Figg

$4.5M

No

2

4/24/2015

Series B - III

Figg

$8M

Yes

3

2/11/2015

Private Equity

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$99M

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10

2/3/2015

Growth Equity

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$99M

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10

Date

8/15/2017

2/1/2017

4/24/2015

2/11/2015

2/3/2015

Round

Series D

Series B - IV

Series B - III

Private Equity

Growth Equity

Company

nCino

Figg

Figg

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Amount

$17.85M

$4.5M

$8M

$99M

$99M

New?

Yes

No

Yes

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Co-Investors

Sources

2

2

3

10

10

Aequitas Capital Management Portfolio Exits

3 Portfolio Exits

Aequitas Capital Management has 3 portfolio exits. Their latest portfolio exit was nCino on July 14, 2020.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

7/14/2020

IPO

$991

2

00/00/0000

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10

00/00/0000

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10

Date

7/14/2020

00/00/0000

00/00/0000

Exit

IPO

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Companies

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Valuation

$991

Acquirer

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Sources

2

10

10

Aequitas Capital Management Acquisitions

3 Acquisitions

Aequitas Capital Management acquired 3 companies. Their latest acquisition was Maple Bay Asset Management on May 02, 2014.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

5/2/2014

Unattributed

$0.1M

Acquired

1

6/13/2008

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$991

$99M

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10

6/25/2007

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$99M

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10

Date

5/2/2014

6/13/2008

6/25/2007

Investment Stage

Unattributed

Companies

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Valuation

$991

Total Funding

$0.1M

$99M

$99M

Note

Acquired

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Sources

1

10

10

Aequitas Capital Management Fund History

6 Fund Histories

Aequitas Capital Management has 6 funds, including Aequitas Capital Opportunities Fund.

Closing Date

Fund

Fund Type

Status

Amount

Sources

5/1/2015

Aequitas Capital Opportunities Fund

Diversified Private Equity

$102.07M

1

11/1/2007

Aequitas Fund of Funds LLC

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$99M

10

10/31/2007

Aequitas Hybrid Fund LLC

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$99M

10

10/31/2007

Aequitas Private Debt

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$99M

10

4/1/2007

Aequitas Catalyst Fund LLC

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$99M

10

Closing Date

5/1/2015

11/1/2007

10/31/2007

10/31/2007

4/1/2007

Fund

Aequitas Capital Opportunities Fund

Aequitas Fund of Funds LLC

Aequitas Hybrid Fund LLC

Aequitas Private Debt

Aequitas Catalyst Fund LLC

Fund Type

Diversified Private Equity

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Status

Amount

$102.07M

$99M

$99M

$99M

$99M

Sources

1

10

10

10

10

Aequitas Capital Management Partners & Customers

2 Partners and customers

Aequitas Capital Management has 2 strategic partners and customers. Aequitas Capital Management recently partnered with Wells Fargo & Company on February 2, 2015.

Date

Type

Business Partner

Country

News Snippet

Sources

2/13/2015

Partner

Wells Fargo & Company

United States

Aequitas Capital, Wells Fargo reach financing agreement to support growth of CarePayment

Aequitas Capital announced that it has reached an agreement with Wells Fargo to provide $ 100 million in additional financing to support the fast-growing demand for CarePayment and its patient financial engagement programs .

1

2/11/2015

Partner

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10

Date

2/13/2015

2/11/2015

Type

Partner

Partner

Business Partner

Wells Fargo & Company

Country

United States

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News Snippet

Aequitas Capital, Wells Fargo reach financing agreement to support growth of CarePayment

Aequitas Capital announced that it has reached an agreement with Wells Fargo to provide $ 100 million in additional financing to support the fast-growing demand for CarePayment and its patient financial engagement programs .

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Sources

1

10

Aequitas Capital Management Team

23 Team Members

Aequitas Capital Management has 23 team members, including current Chief Executive Officer, Robert Jesenik.

Name

Work History

Title

Status

Robert Jesenik

Chief Executive Officer

Current

Keith E Gregg

President

Current

Scott Gillis

Chief Operating Officer

Current

Steve Hedberg

Chief Operating Officer

Current

Andy MacRitchie

Chief Operating Officer

Current

Name

Robert Jesenik

Keith E Gregg

Scott Gillis

Steve Hedberg

Andy MacRitchie

Work History

Title

Chief Executive Officer

President

Chief Operating Officer

Chief Operating Officer

Chief Operating Officer

Status

Current

Current

Current

Current

Current

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