SEC charges unregistered MA in charter school offerings

The Securities and Exchange Commission has charged Tensquare, a national charter school support organization, and its partner Karl Jentoft for acting as a municipal advisor on eight municipal bond issuances for eight separate charter schools in Minnesota.

Without admitting or denying the findings, Tensquare had been ordered to pay $51,716 in disgorgement, $9,523.59 in prejudgement interest, and a $50,000 civil penalty. Jentoft has been ordered to pay a $40,000 civil penalty.

Tensquare provides support to charter schools “by helping schools and school systems achieve dramatic results,” the firm’s mission statement said. “We work with school boards and their leadership teams to conduct in-depth performance audits; develop data-driven, actionable recommendations and strategic operational roadmaps; and provide targeted hands-on assistance to improve organizational effectiveness and student achievement—all of which lead to significant gains in school and organizational structure.”

According to the Commission, the organization also assists with real estate development, including assistance with project financing and construction management. The organization lists the D.C. Public Charter School Board, Nevada Public Charter School Authority and four different charter school districts in Los Angeles as clients. 

Between September 2019 and June 2022, Tensquare and Jentoft provided “advice on the structure, timing and terms of the offerings; providing information on debt financing structuring options, including the sale of municipal securities; advising on current interest rates; participating in the bond pricing process; and soliciting and selecting underwriters for the bond offerings,” the SEC said.

The eight different offerings came in at a total of $79 million in municipal securities and Tensquare charged the eight different schools for its municipal advisory services.

“Jentoft was aware of the municipal advisor registration requirements, however the firm never registered with the Commission,” the SEC said. In addition to his 12 years with Tensquare, Jentoft helped create Capital City Public Charter School in Washington, D.C., served as its board treasurer, and was appointed to the D.C. State Education Office Credit Enhancement Committee.

This action breaks a relative silence for the Commission’s Public Finance Abuse Unit, who signaled that 2024 would bring a stronger focus on unregistered MAs working for charter schools, but so far has brought nothing forward. Earlier this summer, director of the SEC’s Office of Municipal Securities Dave Sanchez said they are seeing a rapid rise in the number of charter school defaults.

The SEC said that the disgorgement and prejudgment interest will be “distributed to the eight charter schools to the extent feasible.”

Tensquare and Jentoft did not respond to requests for comment for the purpose of this story.