The SEC initiated administrative proceedings against a partner of an accounting firm who served as "engagement partner" for the independent audits of a venture capital fund. The SEC alleged that he failed to scrutinize millions of dollars taken in related party transactions under the guise of "advanced" management fees.

An SEC investigation found that the engagement partner had failed to: (i) determine whether the fund's adviser had proper authorization and rationale for taking the money; and (ii) ensure that the transactions were properly disclosed in the fund's financial statements.

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