SQN Capital Management SEC Action: Receiver for AIF III and IV Funds Named October 8, 2026

What this page is, and the rule it follows

Everything the SEC says about SQN Capital in this case is an allegation. The defendants consented to the judgments "without admitting" the allegations, and the court did not decide the facts. What is a fact is the document record: what the SEC filed, what the receiver order says, and what the two public SQN funds, SQN Alternative Investment Fund III L.P. and SQN AIF IV, L.P., told investors in their own SEC filings before they went silent. We name companies, the agency, the court and case numbers only.

The SEC's own release is the starting point, but it runs to a few paragraphs. The complaint (30 pages) and the proposed receiver order (25 pages) hold the numbers: investor counts, liquidation clocks, dates of the promises made to investors. We read both in full, and then put them next to the last annual and quarterly reports the two registered funds filed, which no news summary we found does.

The timeline

This is the third SEC proceeding about the firm in six years. The 2020 and 2023 orders were administrative cease-and-desist proceedings; this one is a federal court action. The complaint alleges that the firm "has paid only $60,000 of the $200,000 penalty" from 2023 and failed to carry out the independent compliance consultant undertaking.

The four funds and who is in them

According to the fund's 10-K, AIF IV admitted 1,508 limited partners between May 29, 2013 and April 2, 2016 and raised $74,965,064 at $1,000 a unit. AIF III's 10-K says it admitted 375 limited partners and raised $27,861,100. The receiver order's investor counts are slightly lower (1,506 and 353), which is consistent with a few positions having been closed. We found no raise figure in a primary source for the two private funds.

The complaint says the funds' assets were mostly industrial equipment leases, held through promissory notes, participation agreements, lease pools and residual sharing agreements, and that the funds "have not produced any significant cash flow" since the pandemic began in March 2020. It names what remains: non-controlling interests in three marine vessels (a combined 40% held by Fund III and Fund IV), a 10% interest in a Mexican leasing company, construction equipment interests and rights to future profits from several films made by a British production company that have not been distributed. It says the only steady income of the past five years was a payment of about $33,000 a month from one Fund IV investment, all used for operating expenses and management fees.

What the SEC alleges about value, audits and the liquidation

Three allegations matter to an investor holding a statement.

1. No audits, no annual statements. The complaint alleges the firm "failed to distribute any annual financial statements, audited or otherwise, to investors in the Funds since 2019" and that for fiscal years 2020 through 2025 no audit was ever conducted. Its compliance manual promised audited statements within 120 days of year end.

2. Per-unit values that did not move. The quarterly account statements sent to hundreds of investors showed a per-unit "Market Value" and said it was prepared by a private third-party consultant. The complaint alleges the president alone prepared the values, that the firm lacked the money to hire a valuation consultant from 2019, and that the Fund III per-unit value was identical every quarter from March 31, 2019 through March 31, 2025, and Fund IV's from March 31, 2020 through March 31, 2025. The method, it says, was to "roll forward" the 2018 audited net asset values without adjusting for market conditions. It adds that redeeming investors received "a greater share of the Funds' assets than they were entitled to receive". The complaint does not state the per-unit figure; the funds' last 10-Ks do (see below).

3. A liquidation that was always about to happen. The complaint quotes updates to investors: in May 2021 that Fund IV was "significantly closer to a near-term liquidation", on September 15, 2021 that "multiple parties" had made offers, and on June 23, 2022 that the final liquidation would be completed "within the next 90 days". A "Revised Liquidation Plan" of September 2022 expected a first sale "in the first week of October". The complaint alleges none of these produced a sales contract, letter of intent or term sheet, and that the firm did not seek investor consent to extend the liquidation periods. Whatever the facts turn out to be, the documents set clocks that ran out: the Fund III prospectus allowed four years plus two one-year extensions.

One discrepancy between sources, which we flag rather than resolve: the complaint dates the start of the Fund III and Fund IV liquidation periods as June 2015 and July 2017, while the funds' own 10-Ks say June 29, 2014 and May 30, 2017. On either set of dates the periods ended years ago.

What the funds' last SEC filings show

AIF III and AIF IV filed Forms 10-K and 10-Q until late 2019. These are the last numbers either fund ever put in an SEC filing. The 2018 10-Ks are the last audited ones; the September 30, 2019 10-Qs are unaudited.

How to read the per-unit rows. They divide the equity the fund reported on its own balance sheet by the units outstanding. That is book equity, not a fair value: it follows the funds' own accounting, and the general partner's account is negative in both funds. We do not say a unit is worth $339, $288 or $203. What the comparison does show is that the funds' own accounts and the $1,000 estimate were far apart, in the last filings that exist. The 10-K for AIF IV itself says the $1,000 "should not be viewed as an accurate reflection of the value of our Units or our assets" and that its manager "did not obtain independent third-party appraisals for any of our assets." It describes the estimate as prepared for ERISA and FINRA reporting.

For AIF IV the balance sheet also shows leverage: $63,973,868 of loans payable at September 30, 2019 against $21,490,737 of partners' equity. In a liquidation, lenders are paid before limited partners; the receiver will find out what is left.

Why the filings stop in 2020

AIF IV filed a Form 8-K on March 16, 2020 saying it expected to file its 2019 10-K "approximately 45 days after March 30, 2020", citing the SEC's COVID-19 relief order. It then filed a Form NT 10-K on May 14, 2020 saying it could not file without unreasonable effort or expense. AIF III filed the same two notices. Neither fund filed a 10-K for fiscal 2019 or any later year. The SEC's September 2023 order recorded that AIF III had not filed a 10-K since April 15, 2019 and had not filed a 10-Q since November 14, 2019.

That means two things for a holder. First, there is no SEC filing from either fund after May 14, 2020 where you can look up the current value, debt or asset list. Second, the complaint says the audited statements stopped at fiscal 2018 for these funds, so the 2018 10-Ks are the last audited picture of them that exists.

What the receiver order says

The order we read is the proposed order filed on September 25, 2026 as Document 13-1; the SEC says the court entered an order appointing a receiver on October 8, 2026, and we could not confirm that the entered text is identical. Subject to that, it provides:

• Who and what. The receiver takes control of the four funds, the general partners of AIF III and AIF IV, and SQN Managing Member, LLC, and of their assets. It lets the receiver pay the fees of Geron Legal Advisors LLC, the receiver's firm, in the ordinary course. The powers of the funds' officers and managers are suspended.
• A plan, not a payout. The receiver must propose for court approval "an actionable plan for the liquidation of the Portfolio Assets and a wind down of the Funds' operations", and a distribution plan within 45 days after the liquidation plan is complete, with initial, interim and final distributions, a claims process and reserves.
• No claim form needed for your units. The distribution plan must provide that no limited partner, member or noteholder is "required to file a claim based solely upon" the equity or debt interest in the fund. Other creditors may have a bar date.
• Reports. A first status report 120 days after entry of the order, then quarterly reports within 20 days of each quarter's end.
• Spending. No single payment above $5,000 without a court order, other than listed ordinary-course items such as insurance and the receiver's counsel.
• Tax. The receiver is to seek status for the estate as a "Settlement Fund" under Section 468B of the Internal Revenue Code.

What a reader can do with this

This page does not tell you what your units are worth or whether you will get money back. Here is what the record supports.

1. Find your own paperwork. The complaint says quarterly account statements and investor updates carried the per-unit value. Keep every one, together with your subscription agreement, K-1s and any redemption correspondence. The receiver's list of investors and their amounts comes from the funds' books.
2. Watch the docket, not the sponsor. The receiver's status reports (first due about February 5, 2027) will give the first look at assets, liabilities and a timetable. The case is No. 1:26-cv-08162 in the Southern District of New York; the SEC release links the complaint, the order and both final judgments.
3. Use the right value for tax and retirement-account paperwork. If the units sit in an IRA, the custodian's year-end value on Form 5498 may still be a number carried over from the sponsor's statements; see our Form 5498 guide and the note on required minimum distributions from illiquid IRA assets. Losses are a separate tax question and depend on when and how an investment is disposed of or becomes worthless; our page on capital loss carryovers shows how the $3,000 annual limit works. Fund K-1s are explained in our K-1 guide.
4. Compare with other wind-downs. Our page on non-traded BDC liquidation plans shows how a sponsor-run liquidation reports. A court-appointed receiver is a different process, run for the court rather than the sponsor.
5. Be careful with offers. Third parties sometimes contact holders of troubled funds offering to buy units at a discount. We have no information about any such offer for these funds; compare any offer with what the receiver reports.

FAQ

All figures are from primary documents read on November 2, 2026: SEC Litigation Release LR-26671 (October 9, 2026); the SEC complaint (Document 1, filed September 18, 2026) and the proposed order appointing receiver (Document 13-1, filed September 25, 2026) in No. 1:26-cv-08162 (S.D.N.Y.), both as published on sec.gov; the SEC's September 1, 2023 order (Exchange Act Release No. 98272, Advisers Act Release No. 6393); and the filings of SQN AIF IV, L.P. (CIK 1560046) and SQN Alternative Investment Fund III, L.P. (CIK 1489367): Forms 10-K for 2018 (accessions 0001493152-19-004439 and 0001493152-19-004256), Forms 10-Q for September 30, 2019 (0001493152-19-017382 and 0001493152-19-017379), Forms 8-K of March 16, 2020 and Forms NT 10-K of May 14, 2020 (0001493152-20-008630 and 0001493152-20-008618). The complaint and order were scanned images on sec.gov; we read them by text recognition and checked each quoted figure against the page. This is analysis of public documents, not investment, legal or tax advice.