Deerpath Capital Management, Lp

Allegations: DEERPATH SELF-REPORTED THAT IT MADE LOANS IN CALIFORNIA PRIOR TO BECOMING AWARE OF CALIFORNIA FINANCING LAW (CFL) REQUIREMENTS. CFL REQUIRES FINANCE LENDERS MAKING AND BROKERING CONSUMER AND COMMERCIAL LOANS IN CALIFORNIA TO BE LICENSED AND REGULATED. Status: Final Sanction Detail: PENALTY OF $62,500 WAS PAID ON 4/1/2020. Summary: IN MAY 2019, DEERPATH BECAME AWARE THAT STATE OF THE CALIFORNIA HAS A CALIFORNIA FINANCING LAW ("CFL") THAT REQUIRES FINANCE LENDERS MAKING AND BROKERING CONSUMER AND COMMERCIAL LOANS IN CALIFORNIA TO BE LICENSED AND REGULATED. AFTER BECOMING AWARE OF THE CFL REQUIREMENTS, DEERPATH PROMPTLY CONTACTED LEGAL COUNSEL AND SUBMITTED A LICENSE APPLICATION IN AUGUST 2019 FOR DEERPATH FUNDS' FUTURE LENDING ACTIVITIES IN CALIFORNIA AND VOLUNTARILY SELF-REPORTED LOANS DEERPATH MADE IN CALIFORNIA PRIOR TO BECOMING AWARE OF THE CFL REQUIREMENTS. BY WAY OF BACKGROUND, DEERPATH BEGAN ITS BUSINESS AS AN INVESTMENT MANAGER OF SMALL BUSINESS INVESTMENT COMPANIES ("SBICS") IN 2009 AND ONLY MANAGED SBICS UNTIL 2013. BECAUSE SBICS ARE EXPRESSLY EXEMPT FROM CFL LICENSING REQUIREMENTS, DEERPATH DID NOT PURSUE LICENSURE FOR ITS ACTIVITIES WHEN ESTABLISHING ITS BUSINESS. IN 2013, DEERPATH LAUNCHED A SERIES OF NON-SBIC FUNDS, WHICH OPERATED UNDER THE SAME INVESTMENT STRATEGY AS ITS SBIC FUNDS. DEERPATH WAS UNAWARE AT THAT TIME OF THE REQUIREMENT THAT NON-SBIC FUNDS WOULD REQUIRE LICENSING UNDER THE CFL TO MAKE CERTAIN LOANS TO CALIFORNIA BORROWERS. DEERPATH REACHED AN AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT IN APRIL 2020 TO PAY A FEE OF $62,500 TO SETTLE THE PAST VIOLATIONS AND WE EXPECT TO RECEIVE OUR LENDERS LICENSE IN APRIL 2020.