Dan Primack

We're just three days into the 60-day comment period on the SEC's proposed rules for placement agents, and market pros have already begun voicing their disapproval. The SEC website shows five comments submitted on Monday and Tuesday, with four of them objecting to the proposal's ban on investment advisors (PE funds, VC funds, hedge funds, etc.) using placement agents when trying to solicit fund capital from public pension systems. The fifth letter is an objection to the proposed ban on political contributions from investment advisors to pension-connected officials, which the writer claims is a violation of free speech rights (this argument won't fly -- nor should it -- since SEC already regulates political contributions in other areas). Read sampling of what's been submitted after the jump...

Not too long ago, A123 Systems looked poised to become one of the costliest VC-backed busts of the new millennium. The Watertown, Mass.-based company had raised over $200 million to make lithium-ion batteries for electric vehicles, but couldn't find takers. In fact, A123's only contract at this time last year was with Black & Decker, which used the startup's batteries in some of its cordless power tools. Overall, the company was operating at a loss. A123's most painful loss was General Motors, which had been looking for batteries for its upcoming Chevy Volt. Not only did GM pick a Detroit-based subsidiary of South Korea's LG Chem, but President Obama poured salt on the wound by publicly lamenting that America wasn't making batteries for the next generation of hybrids. As one Boston-area VC put it to me last December: "I'm not sure they have many bullets left, except for the one they'll need to use on themselves." Since then, A123 has experienced the ultimate V-shaped recovery. First came news in April that Chrysler had picked A123 to supply batteries for its first-ever line of electric vehicles (due in showrooms next year). That deal included a plan to open a manufacturing facility in Michigan, and was soon

James Kim has quietly joined Khosla Ventures, after stepping down as a senior partner with CMEA Capital. Kim originally joined CMEA in 2007 from GE Commercial Finance, and was promoted in April 2008, and focused on energy technology companies like A123 Systems. News of his transition was first reported by Private Equity Insider, and confirmed […]

The SEC today released a series of proposed rules that would effectively bar private equity firms from using placement agents, when soliciting capital commitments from government-sponsored organizations (public pensions, etc.). The rules also would prohibit investment advisors from soliciting such commitments within two years of making a political contribution to a system official, and also would require that that investment advisors keep records of all political contributions made by its employees (contributions under $250 would be excluded, so long as the contributor is legally entitled to vote for the recipient). All of this is intended to combat pay-to-play scandals, which have been uncovered in states like New York, Illinois, New Mexico, Ohio and Connecticut. And I completely agree with the ban on political contributions (which extends to other "gifts"). Unfortunately, the umbrella placement agent ban is a broad overreach that will severely hamper new and small investment firms from raising fund capital. Hopefully, a compromise will be reached, whereby the implicit payoffs are banned but the legitimate placement agent work can be maintained. Two other minor thoughts while reading through the 114-page proposal (entire doc posted below): (1) There is no mention of contributions by the spouse of an investment advisor, even though such contributions are commonplace. (2) There is no mention of whether

The U.S. House of Reps on Friday passed a bill designed to limit executive compensation at large financial institutions, but private equity and venture capital pocketbooks are unlikely to be affected. Draft legislation would have applied to PE/VC firms (plus hedge), but the final bill included a clause about how affected firms -- including “investment advisors” -- must have assets of at least $1 billion. Now plenty of firms publicize their billions, but almost all of that cash in tied up in funds. Investment advisors, on the other hand, typically have between a few hundred thousand dollars and a few million dollars. As Daniel Evans, a partner with Ropes & Gray, explains it: “The funds are investment companies (like mutual funds, but unlike mutual funds they are exempt from registration), and neither mutual

Newbie venture capital firm Andreessen Horowitz is a bit of an enigma, when it comes to its public profile. On the one hand, it's impossible to say the firm is in stealth mode, given that Andreessen has done more interviews in the past month than Barack Obama. On the other, Horowitz is apparently in some sort of witness protection program, the firm has no website and doesn't comment at all about employees whose names aren't in the masthead. In fact, the only other employee we even know about is Ronnie Conway, and that's only because poppa Ron told some people about it last week at the Fortune Brainstorm Tech conference. But thanks to LinkedIn, we know now at least two more members of the Andreessen Horowitz family: Scott Kupor, chief operating officer, and Shannon Callahan, director of human resources and recruiting.

Earlier this year, video processor startup Novafora Inc. boldly acquired publicly-listed Transmeta Corp. for $255 million. A few months later, company CEO Naki Rakib and VC backer Robert Genisier (Vertex Capital) rang the opening bell on the New York Stock Exchange. Yesterday, the San Jose, Calif.-based company shut its doors. peHUB has learned that the company laid off all 40 employees yesterday at noon, after being unable to attract additional venture capital funding. Existing backers Vertex and Gemini Israel Funds apparently opted against another large investment, and no new firm stepped up. "VC appetite has really dried up for later-stage semiconductor companies," says a former Novafora executive, reached at his home this morning. "They all want to do social networking and things like that."

What follows are seven VC deals culled from recent Regulation D filings with the SEC. None of them has been otherwise disclosed: * Ibiquity Digital Corp., a Columbia, Md.-based developer of digital HD radio technology, has raised around $42.48 million in new VC funding. The company reports that half is in cash and half is an exchange offer of existing shares. Backers include ABC, Clear Channel, CBS Radio, Grotech Capital Group, JPMorgan Partners, New Venture Partners, FirstMark Capital, Ford Motor Co., Harris, Texas Instruments and Visteon. The company had previously raised over $140 million since 1999.

Hank Paulson tiptoed into the venture capital waters today, participating in a $24 million Series B round for electric car and battery maker Coda Automotive. He also agreed to join the Santa Monica, Calif.-based company’s board of advisors. So does Paulson want to become the next John Doerr? Well, it’s probably more likely than Doerr […]

A group of around two dozen placement agents have formed a lobbying group, to address state and federal efforts to ban their usage by PE/VC firms trying to raise capital from from public pension systems. The group has retained MultiState Associates to do the regulatory glad-handing, and is being spearheaded by C.P. Eaton Partners and Atlantic-Pacific Capital. I spent some time on the phone this morning with C.P. Eaton founder Charlie Eaton, to learn more about the group's objectives and structure. What follows is an edited transcript: Is this group supposed to be around for the long haul, or is it more a short-term creation to deal with immediate issues at the state and federal level? Eaton: We haven’t thought beyond the current issues. I think we assume we might have to work on this all year, and if we can address and get a favorable outcome in New York, then perhaps it would create a precedent that would be used in states like Illinois and New Mexico, which both have bans in certain jurisdictions. We always knew the SEC would get involved, so that would be part of the program as well. We may not need to keep this coalition together after that, although we could obviously continue discussions and commiserate more informally.