Ex-49ers' financial firm may be investigated by SEC

Getty Images file photosRonnie Lott

Getty Images file photosRonnie Lott

Former members of the 49ers dynasty that won five Super Bowls from 1982 through 1995 are reportedly under federal investigation for misleading investors as the investment firm they owned struggled to stay solvent in 2008.

According to four people with knowledge of the probe, HRJ Capital LLC, co-founded in 1998 by Hall of Fame safety Ronnie Lott and All-Pro lineman Harris Barton, is being investigated by the U.S. Securities and Exchange Commission.

Lott, 52, and Barton, 47, traded on their gridiron glory to gain access to venture capital and buyout funds.

The defunct investment firm invested $2.8 billion in venture capital and leveraged buyout funds for public pension systems and athletes such as Indianapolis Colts quarterback Peyton Manning.

In early 2008, HRJ had more than $300 million in unfunded commitments to buyout funds when it received capital calls, according to company records. HRJ was unable to raise cash to meet those obligations and service loans from the Silicon Valley Bank.

SEC lawyers are investigating whether HRJ and its managers improperly shifted debt to investors to meet those capital calls, according to the sources, who declined to be identified because the probe hasn’t been made public.

SEC lawyers have been interviewing former HRJ employees and clients and reviewing emails and company records since about April. Investigators also are probing whether HRJ failed to disclose the alleged shift of debt, the sources said.

Barton and Lott’s lawyers both declined to comment. Marc Fagel, the SEC’s San Francisco director, also declined to comment.

In 2008, an HRJ affiliate responsible for fulfilling capital calls issued by private equity funds transferred those liabilities to HRJ’s funds of funds without informing investors, according to Deirdre Nectow, director of business development at Cambridge Associates LLC, a Boston-based consulting firm that advised many of the firm’s investors.

After HRJ’s investors discovered the maneuver, they protested that they were now responsible for meeting capital calls to buyout funds instead of the affiliate controlled by Barton and Lott. Such exposure could drain the funds of capital and ruin its performance.

HRJ was on the verge of bankruptcy when Capital Dynamics AG, a Swiss firm, took over management of its accounts in April 2009, according to company records. HRJ’s investors suffered no losses, according to a term sheet of the deal.

LocalNFLSan Francisco 49ersSecurities and Exchange Commission

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

San Francisco Giants pitcher Anthony DeSclafani (26) starts against the Colorado Rockies at Oracle Park on April 11, 2021 in San Francisco, California. (Photography by Chris Victorio | Special to the S.F. Examiner).
Giants finish sweep of Rockies behind DeSclafani’s scoreless outing

Even with fans back at Oracle Park, San Francisco Giants pitchers have… Continue reading

Kindergarten teacher Chris Johnson in his classroom at Bryant Elementary School ahead of the school’s reopening on Friday, April 9, 2021. (Kevin N. Hume/S.F. Examiner)
SFUSD students are going back to the classroom

After more than a year of distance learning, city schools begin reopening on Monday

Keith Zwölfer, director of education for SFFILM, stays busy connecting filmmakers and studios with public, private and home schools<ins>.</ins><ins> (Kevin N. Hume/S.F. Examiner) </ins>
Streamlined SF film festival focuses on family features

In the early days of the San Francisco International Film Festival, the… Continue reading

“Gay Passover,” a fun Haggadah, includes some cocktail recipes. <ins>(Courtesy Saul Sugarman)</ins>
A Passover journey toward something different

It was nice to see my family, and I look forward to reconnecting with friends

Oakland A’s left fielder Tony Kemp fielded a fly but missed the catch in the April 5 game against the Los Angeles Dodgers at the Oakland Coliseum. <ins>(Chris Victorio/Special to S.F. Examiner)</ins>
Bay Area sports for week of April 11, 2021

A look at the upcoming major Bay Area sports events (schedules subject… Continue reading

Most Read