Firms, individuals charged with alleged $120M pre-IPO investment fraud

Firms, individuals charged with alleged $120M pre-IPO investment fraud
SEC says investors were misled while defendants took millions of dollars in fees.
OCT 01, 2024

More than 900 investors were duped into believing they were investing in regulated funds holding shares in pre-IPO companies, according to the Securities and Exchanges Commission.

The allegations against three individuals and several entities are that investors were told that their combined investments of more than $120 million were without upfront fees – when $16 million in commissions were charged; that the funds were SEC-regulated when they were not; and that the funds owned shares that they did not.

The alleged activities took place from at least the period October 2019 until December 2022 and the SEC says that many of the investors did not receive the shares they were promised.  

The SEC charged John LoPinto, Robert Wilkos, and Laren Pisciotti along with Keyport Venture Partners LLC; Keyport Venture Management LLC; and Keyport Venture Advisors LLC, which were jointly owned and/or controlled by LoPinto and Wilkos; and Principal Pre-IPO Consulting Group LLC and GlobalX VC LLC, which were owned or controlled by Pisciotti.

LoPinto is also said to have hidden his disciplinary history including sanctions by the SEC and FINRA.

“As alleged, among other lies, the defendants lied about the shares they owned and about fees they said they wouldn’t charge, and in the end, they took millions of their investors' money for themselves,” said Stacy L. Bogert, Associate Director of the SEC’s Division of Enforcement. “Today we start the process of holding them accountable for their fraudulent conduct.”

The SEC complaint was filed in the United States District Court for the Eastern District of New York. None of the allegations has been proven in court.

The SEC is seeking permanent injunctive relief, return of allegedly ill-gotten gains together with prejudgment interest, and civil penalties from all defendants. It is also seeking officer and director bars for the three individuals. Wilkos has agreed to settle the case and consent to injunctive relief.   

Latest News

RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence
RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence

Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.

Blue Owl Capital, Voya strike private market partnership for retirement plans
Blue Owl Capital, Voya strike private market partnership for retirement plans

The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.

Top Commonwealth advisor to recruiters: Stop with the cold calls already!
Top Commonwealth advisor to recruiters: Stop with the cold calls already!

“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.

Why AI notetakers alone can't fix 'broken' advisor meetings
Why AI notetakers alone can't fix 'broken' advisor meetings

Wealth tech veteran Aaron Klein speaks out against the "misery" of client meetings, why advisors' communication skills don't always help, and AI's potential to make bad meetings "100 times better."

Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit
Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit

The proposed $120 million settlement would close the book on a legal challenge alleging the Wall Street banks failed to disclose crucial conflicts of interest to investors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.