FINRA Enforcement is making inquiries into the operations of Linqto Capital, the broker-dealer unit of Linqto Inc., which filed for Chapter 11 bankruptcy protection last month in Texas.
Linqto Inc. was one of the first tech platforms to promise access to small investors into the high-risk, high-reward world of private investments, particularly shares in companies before their initial public offering, or IPOs.
Linqto crashed to a halt this summer.
“Linqto convinced Mom and Pop investors they were getting entrance to how the 1% invest in private or alternative investments,” said Scott Silver, managing partner of Silver Law Group, who represents a plaintiff. “In reality, customers were getting pre-IPO stock at unfair valuations.”
“Linqto claimed to have shares in high-profile companies for investors to buy into, but the fees and costs were outrageous,” Silver said.
The Wall Street Journal in July reported that an internal investigation at the company “turned up evidence that Linqto customers never owned the securities they thought they did and that the company was marketing to some investors who may not have been eligible to buy stakes in private companies in the first place.”
"Linqto cannot continue to operate under existing conditions without restructuring,” the company said in a statement July 8. “The company faces potentially insurmountable operating challenges as a result of serious alleged securities law violations and related ongoing investigations by the Division of Enforcement of the U.S. Securities and Exchange Commission as well as other regulatory agencies.”
FINRA, the self-regulatory for the brokerage industry, is part of the investigation into the company, according to a filing last month with the SEC by Linqto Capital, its broker-dealer based in Manhattan.
“The company is currently the subject of an ongoing investigation by FINRA Enforcement, as well as potential involvement in a broader SEC investigation focused on the company's parent and its affiliated fund, Liquidshares,” according to the filing. “The company is fully cooperating with all applicable regulatory inquiries.”
According to its BrokerCheck profile, the chief executive of Linqto Capital is Sean Bowden. He could not be reached on Monday morning to comment.
Linqto’s “trading platform helped pioneer a private stock trading avenue for the little guy, with fewer rules and less regulation than the public market,” according to the Wall Street Journal. “Its ‘guerrilla’ tactics harked back to the days of boiler-room trade operations, featuring blast emails and posts on social media hyping up stocks and playing on customers’ fear of missing out—or “FOMO”—on new investments, most of them sought-after tech companies like Elon Musk’s SpaceX and the artificial intelligence company Anthropic.
Linqto had about $500 million in client assets, according to the Wall Street Journal.
A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.
The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.
Its SEC filings said one thing - a congressional probe said another.
Sham agreements allegedly padded revenue by 345%.
"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
