SEC: Former alts B-D owner defrauded investors of $900K in stock scam

Regulator says he sold the same shares in a technology company twice

Dec 3, 2014 @ 12:18 pm

By Bruce Kelly

The owner of a defunct broker-dealer wholesaler of illiquid alternative investments has been sued by the Securities and Exchange Commission for allegedly defrauding investors of $900,000 in a stock scam.

The SEC on Tuesday sued Vinay Kumar Nevatia, the one-time owner of KBR Capital Markets, saying he “went to great effort to conceal his double dealing” from eight investors in an alleged stock scam, according to the complaint.

The investors bought shares of CSS Corp. Technologies (Mauritius) Limited, a privately held technology company, through Mr. Kumar in 2008. Three years later, Mr. Kumar began reselling the shares without telling the investors, according to the SEC complaint.

“Kumar deceived subsequent buyers into believing that he was the legitimate and sole owner of the shares, and had them wire the money to purchase the shares to him,” according to the complaint. “He lied to CSS's transfer agent, saying that new stock certificates should be issued to the new buyers and that the original stock certificates had been lost.”

“Even after fraudulently selling their shares, (Mr.) Kumar deceived the original CSS investors into thinking that they still held them,” according to the complaint. “He then absconded with the proceeds belonging to the original investors.”

Mr. Kumar's wholesaling broker-dealer based in Palo Alto, Calif., KBR Capital Markets, closed in September 2013 after it failed to meet industry requirements of the Financial Industry Regulatory Authority Inc., according to the firm's profile on BrokerCheck.

That summer, Mr. Kumar told InvestmentNews his firm had no serious financial problems. Soon after that, KBR lost its selling agreement, for a nascent nontraded business development company that at the time cited a lack of financial stability at the broker-dealer. KBR then went out of business.

Mr. Kumar, 46, resided in Palo Alto from 2004 through 2013 and used several aliases during that time, according to the SEC complaint. He could not be reached for comment.

From 2007 to 2013, he solicited real estate and securities investments through various entities he owned or controlled, including KBR Capital Markets, according to the SEC.

The SEC complaint does not focus on KBR Capital Markets, Mr. Kumar's broker-dealer, or the nontraded BDC.


What do you think?

View comments

Most watched


How the 2020 elections could impact ESG investing

Joseph Keefe, president of Impax Asset Management, on the elections and how advisers can build a bridge to the next generation of clients with ESG investing.


How advisers can be a gamechanger for women investors

Why women defer to men when it comes to finances and how advisers can combat this phenomenon and make a difference for female investors, according to Heather Ettinger, founder and CEO Luma Wealth Advisors.

Latest news & opinion

Schorsch, AR Capital to pay $60 million to settle SEC charges

The former REIT czar and his firm wrongfully obtained millions linked to REIT mergers.

CFP Board postpones enforcement of its revised fiduciary standard

Board's new Code of Ethics and Standards to be enforced next June, in line with the SEC's Reg BI

Charles Schwab reportedly in talks to buy USAA brokerage, wealth management business

The deal would net Schwab roughly $100 billion in new assets.

Advisers scramble to help retirees navigate looming Fed rate cut

The Fed's first interest-rate cut in a decade has advisers warning against chasing the bait of risk over safety.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print