Arctaris Impact Investors LLC has hired a former chief compliance officer for Bain Capital and JPMorgan Chase & Co. as it prepares to register as an adviser with the U.S. Securities and Exchange Commission.
Alan Halfenger will serve as Arctaris’s general counsel and chief compliance officer, the fund said on Tuesday. The hire is part of a push by Arctaris to build out its infrastructure, including its compliance program and internal controls, as it prepares to grow.
Mr. Halfenger’s role will be twofold, he said in an interview on Wednesday. The firm will soon be registering with the SEC, and he will be responsible for ensuring the required policies are in place, including around anti-money-laundering, financial reporting and employee conflicts.
The other half of his job will involve helping Arctaris’s portfolio companies improve their own compliance programs. For Actaris, which focuses on impact investing in low-income communities under a Trump-era tax policy, that means advising on issues such as cybersecurity, Mr. Halfenger said.
Boston-based Arctaris invests in so-called opportunity zones, which were created as part of a 2017 tax law that provides incentives to invest realized capital gains in designated low-income neighborhoods, a program that supporters say can deliver both investment returns and a positive social impact.
While it initially garnered bipartisan support, Democrats soon soured on the idea, saying the program benefited the wealthy more than residents of low-income areas. The Biden administration has promised to change the policy.
A White House report released by the Trump administration last year estimated that the policy had raised $75 billion in private capital by the end of 2019. The report estimated that the designation alone had caused a 1.1% increase in housing values, which it said was a boon to opportunity zone homeowners.
But a report by two researchers at the University of California, Berkeley, earlier this year found that opportunity zone investments were highly concentrated in relatively few areas. It also appeared to show that investors favored opportunity zone neighborhoods with higher incomes, home values and income growth—indicating that money was predominantly flowing to already gentrifying neighborhoods.
Arctaris’s recent investments have included a $26.9 million redevelopment project in Erie, Pa. The project will bring a grocery store, food halls and residential housing to a U.S. Agriculture Department-designated food desert and one of the poorest ZIP Codes in the U.S., the fund says.
Last year, the fund also promised to invest $38 million in revitalizing Maine’s third-largest ski area, a project it said would create more than 500 full- and part-time jobs.
Growing investor interest in socially responsible and environmentally sustainable companies has sparked calls for greater regulatory oversight of firms that specialize in investing in them.
The SEC has said it would develop rules around disclosures that tout successes that aren’t strictly financial—a set of metrics that fall under the broad umbrella of environment, social and governance factors.
Mr. Halfenger said he welcomed the SEC’s rule-making. “What are those rules going to look like? They are going to say: Do what you say, and measure and test against that,” he said.
He added: “Those are things that the good impact investment firms are going to welcome. We’re doing that anyway.”
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