Sierra Crest Investment Management Llc

Allegations: THE SEC ALLEGED THAT PORTMAN RIDGE FINANCE CORPORATION (FORMERLY KNOWN AS KCAP FINANCIAL INC. ("KCAP")) FAILED TO DISTRIBUTE A CONTEMPORANEOUS WRITTEN STATEMENT DISCLOSING THE SOURCES OF THE FUNDS FOR ITS QUARTERLY DISTRIBUTION PAYMENTS AND VIOLATED THE REPORTING, BOOKS AND RECORDS, INTERNAL ACCOUNTING CONTROLS, AND POLICIES AND PROCEDURES PROVISIONS OF THE FEDERAL SECURITIES LAWS FROM AT LEAST 2010 THROUGH THE THIRD QUARTER OF 2014. KCAP ENTERED INTO A STOCK PURCHASE AND TRANSACTION AGREEMENT WITH AN AFFILIATE OF SIERRA CREST INVESTMENT MANAGEMENT LLC ("SIERRA CREST"), IN CONNECTION WITH WHICH SIERRA CREST BECAME THE INVESTMENT ADVISER TO PORTMAN RIDGE CORPORATION EFFECT APRIL 1, 2019. Status: Final Sanction Detail: AS A RESULT OF A DECEMBER 4, 2018 ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS IN RESPONSE TO AN OFFER OF SETTLEMENT (THE "ORDER"), KCAP WAS ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 13(A), 13(B)(2)(A), AND 13(B)(2)(B) OF THE EXCHANGE ACT AND RULES 12B-20, 13A-1, 13A-11,AND 13A-13 THEREUNDER AS WELL AS SECTION 19(A) OF THE INVESTMENT COMPANY ACT AND RULES 19A-1 AND 38A-1(A)(1) THEREUNDER. Summary: ON DECEMBER 4, 2018, KCAP ADMITTED TO THE FINDINGS IN THE ORDER AND CONSENTED TO THE ENTRY OF THE ORDER. THE ORDER FOUND THAT KCAP FAILED TO PROPERLY ACCOUNT FOR DISTRIBUTIONS IT RECEIVED FROM WHOLLY-OWNED ASSET MANAGER AFFILIATES BY RECORDING THE ENTIRETY OF THOSE DISTRIBUTIONS AS DIVIDENDS WHEN A MAJORITY OF THE FUNDS RECEIVED WERE IN FACT A RETURN OF CAPITAL. AS A RESULT, KCAP'S QUARTERLY DISTRIBUTION PAYMENTS TO ITS SHAREHOLDERS WERE NOT ACCOMPANIED BY A CONTEMPORANEOUS WRITTEN STATEMENT DISCLOSING THE SOURCES OF THE FUNDS DISTRIBUTED. ADDITIONALLY, KCAP FAILED TO MAINTAIN ACCURATE REPORTING, BOOKS AND RECORDS, INTERNAL ACCOUNTING CONTROLS, AND POLICIES AND PROCEDURES. AS A RESULT OF THE AFOREMENTIONED CONDUCT, KCAP VIOLATED THE REPORTING, BOOKS AND RECORDS, AND INTERNAL ACCOUNTING CONTROLS OF SECTIONS 13(A), 13(B)(2)(A), AND 13(B)(2)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULES 12B-20, 13A-1, 13A-11, AND 13A-13 THEREUNDER. IN ADDITION, THE ORDER FOUND THAT KCAP VIOLATED THE PAYMENT AND DISTRIBUTION PROVISIONS AND THE POLICIES AND PROCEDURES REQUIREMENT OF SECTION 19(A) OF THE INVESTMENT COMPANY ACT AND RULES 19A-1 AND 38A-1(A)(1) THEREUNDER.