SEC targets Backswing Ventures over inflated fees and false portfolio claims

The SEC is accusing a Florida fund manager of pocketing seven times his allowed fees and misrepresenting investment holdings to mislead investors. 

In a complaint filed in the Middle District of Florida on April 9, the Securities and Exchange Commission alleges that Kyle James Asman and his firm, Backswing Ventures GP LLC, ran a years-long fraud against a private fund and its limited partners (SEC v. Backswing Ventures GP LLC et al., Case No. 6:26-cv-00778). 

The alleged scheme ran from no later than February 2020 through at least April 2023 and centered on Backswing Ventures LP, also known as Backswing Ventures Fund I, LP, a Delaware limited partnership Asman formed to invest in early-stage companies across defense, commercial real estate, technology, data, and healthcare. 

Neither Asman nor his firm has ever been registered with the SEC as an investment adviser. 

According to the SEC, Asman extracted more than $515,000 in management fees during the fund's first year — more than 23% of total capital contributions. Under the fund's own offering documents, the proper fee for that period ranged between roughly $33,800 and $70,103, depending on which calculation method applied. That means Asman allegedly took about seven times what he was entitled to under those documents. 

The SEC says a fund administrator flagged the overcharge in a March 30, 2021 email and told Asman the fund's financial statements would be adjusted to show a $70,103 management fee, with the remaining $445,532 booked as prepaid management fees. The administrator also warned him not to transfer any further fees until the prepaids were depleted. Instead, the complaint alleges, prepaid management fees actually climbed to $448,861 by year-end 2021. 

The allegations go well beyond fees. 

The SEC claims Asman told prospective investors in 2020 that the fund had "raised 48 out of the 50 million," was "currently through $45M of our $50M capital raise," and was "just about fully subscribed." In reality, the fund's financial statements showed capital commitments of $3,823,800 and actual contributions of only $2,233,800 as of December 31, 2020. 

The commission also alleges Asman repeatedly told limited partners the fund had invested in an artificial intelligence company, labeling the position as "Status: Invested" across multiple portfolio updates in 2020 and early 2021, and later describing specific share counts, cost basis and market value. According to the complaint, BVLP ultimately never invested in that company despite "extensive discussions" and looking at it "for a long period of time." 

Separately, the SEC says Asman overstated the fund's stake in a firearm detection company. The fund had invested $150,000 by November 2020, but in early 2021 Asman signed agreements for an additional $200,000 in preferred shares. After repeated delays, those shares were cancelled in April 2021 when the fund failed to tender payment. Even so, the SEC alleges, later portfolio updates in 2021 described a "Total Investment $350,000" in the company and touted a big markup tied to a later financing round. 

On top of that, the SEC alleges Asman never engaged an independent auditor despite a clear requirement in the Limited Partnership Agreement, and did not provide limited partners with audited annual financial statements or unaudited quarterly financials at all the intervals the agreement required. An audit, the SEC notes, would have revealed the excessive management fee payments. 

The complaint also takes aim at how Asman marketed himself. The offering memorandum described him as having held "investment banking roles" at two firms, while marketing materials amplified that to a "tenure as a banker." According to the SEC, one role was a summer internship during his junior year of college where he was not offered a full-time position, and the other was a job held only during his senior year. 

The SEC is seeking permanent injunctions, a bar preventing Asman from acting as or being associated with any investment adviser, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties. A jury trial has been demanded. 

No determination has been made on the merits. The allegations remain unproven and the defendants have not yet responded in court. 

Backswing's side

In a statement provided to InvestmentNews, Backswing rejected what it called "false allegations and clear overreach" by the SEC in its complaint.

"The claim stems from a fundamental misunderstanding and incorrect interpretation of our contract and fees associated with an earlier Fund I engagement, and not from any misconduct," the statement, provided by a spokesperson via email, read in part. "We plan to challenge these allegations decisively and show that they lack merit through clear, contractual evidence."

Backswing emphasized that no investors have leveled complaints against the fund, and that investors had always been informed of the broad discretion Backswing and Asman had to manage it. The management fees cited in the SEC complaint, it said, were actually legal fees paid by the fund in relation to the SEC inquiry.

The fund's limited partnership agreement – a copy of which was provided to InvestmentNews for review – gave it latitude to pay any and all expenses, and Asman reportedly forewent a salary he was entitled to under the LPA to help maximize profits for investors. 

"Backswing Ventures has always operated within the terms of its agreements and with a strong commitment to our investors," the firm statement said. "We will address this matter through the appropriate legal process while staying focused on delivering results."

This article has been updated to reflect clarifications by Backswing Ventures.