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Firm That Hired Intern in College Scandal Cuts Dad’s Company

Michelle Kim
Firm That Hired Intern in College Scandal Cuts Dad’s Company

(Bloomberg) -- Hercules Capital Inc. took a beating from several research shops after Chief Executive Officer Manuel Henriquez was charged in a college-admission cheating conspiracy. One of them: the firm that gave his daughter an internship.

Henriquez’s older daughter, Isabelle, interned at Compass Point Research & Trading LLC while attending Georgetown University, she wrote on her LinkedIn profile. She got into the school after her parents allegedly paid phony proctors to help her cheat on standardized tests.

On the day the Hercules CEO was charged, Compass Point cut its rating on the Palo Alto, California-based venture-debt firm to neutral from buy. Hercules shares dropped 8.9 percent on Tuesday, and Henriquez stepped down as CEO.

“Given current events there is the possibility that originations could slow,” Compass Point analyst Casey Alexander wrote in a research note Tuesday. “We do believe the strong credit culture sits across the HTGC platform and would not likely change, but the ability to continue rapid origination growth could suffer.”

Analysts from firms including Wells Fargo & Co. and Keefe, Bruyette and Woods Inc. also cut their ratings and price targets for Hercules. Compass Point had a buy rating on the stock starting in September 2017, and a neutral rating for more than a year before that, according to data compiled by Bloomberg.

Compass Point CEO Scott Dreyer didn’t respond to an email and phone call seeking comment on the internship, and other executives at the firm didn’t respond to calls seeking comment. Isabelle Henriquez didn’t respond to an email or a message sent through LinkedIn.

In addition to issuing research on Hercules, Compass Point has worked on stock and debt sales for the company. It co-managed note offerings for Hercules totaling $265 million over the past two years, and last year it was lead manager of a $73 million follow-on stock offering, according to Compass Point’s website.

Manuel and Elizabeth Henriquez allegedly paid for proctors to help their two daughters cheat on college-entrance exams and arranged to bribe the head tennis coach at Georgetown to designate their older daughter a recruited athlete, according to the federal indictment Tuesday. The tennis coach was also charged. None of the students involved in the alleged conspiracy was charged.

Isabelle Henriquez, identified only as the Henriquezes’ older daughter, participated in the conspiracy, according to the indictment. An exam proctor “sat side-by-side with the daughter during the exam and provided her with answers to the exam questions, and after the exam, he ‘gloated’ with Elizabeth Henriquez and her daughter about the fact that they had cheated and gotten away with it,” prosecutors said.

(Updates with note, stock offerings in seventh paragraph.)

To contact the reporter on this story: Michelle Kim in New York at mkim651@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub

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