The Securities and Exchange Commission has barred Kieran J. Dale, 49, of Downingtown, Pa., from the investment advisory business as part of a settlement of securities fraud charges for misappropriating more than $9 million from a private equity venture capital fund, whose biggest investors were state and local public pension funds.
The fund’s largest investors were: the Philadelphia Board of Pensions and Retirement, which invested $27 million in the fund; the Pennsylvania State Employees’ Retirement System, which invested $25 million; and the Connecticut Retirement Plans and Trust Funds, which invested $15 million.
Other investors included the Melrose Retirement System and the Middlesex Retirement System, both of which are located in Massachusetts.
According to the SEC, Dale was a managing director of the Keystone Venture V LP venture capital fund between 1997 and 2001. During that time, he was an investment adviser and provided investment advice to the fund through three companies and he and two other individuals owned.
Upon request, Dale would send money from the Keystone fund to Michael Liberty, a real estate developer in Gray, Maine, who was a representative of two financially troubled limited partners of the fund.
The SEC contends that about $9 million of the fund was misappropriated in this way and that at least half of the money was used by Liberty to pay personal debts and expenses.
Keystone V’s financial statements, which were distributed to existing and prospective investors and limited partners of the fund, concealed the diversion of the money.
Dale was ordered to disgorge almost $1.37 million of ill-gotten gains, but the SEC waived the requirements for disgorgement and a civil penalty after he demonstrated he could not pay them.
Under the settlement, Dale cannot re-enter the investment advisory business unless he disgorges the money and pays the civil penalty, regardless of the SEC waivers.
The SEC has securities fraud charges pending against Liberty and has settled charges with two other investment advisers who helped invest the fund’s assets — John R. Regan of Clarendon Hills, Ill., and Peter E. Ligeti of Princeton Junction, N.J.
