SEC charges boiler room operator with $2.1 million fraud

The Securities and Exchange Commission has charged Mark Alan Lisser with fraud for operating boiler rooms on Long Island, New York and in Boca Raton, Florida, through which he raised approximately $2.1 million from at least 71 retail investors and misappropriated more than $900,000.

The SEC’s complaint, filed in a New York federal court, seeks injunctive relief, disgorgement plus prejudgment interest and civil penalties. In a parallel action, the U.S. Attorney’s Office has filed criminal charges against Lisser.

According to the SEC’s complaint, from approximately October 2018 to March 2019, Lisser and his salespeople solicited investors for Knightsbridge Capital Partners, an unregistered fund manager he operated, by misrepresenting that the Knightsbridge-managed funds had purchased “pre-IPO” shares in three well-known companies directly from employees of the companies.

[More: ‘Boiler room’ brokerage operation busted]

The complaint alleges that Knightsbridge did not own any shares at the time it solicited investors and later purchased shares or interests in shares of the companies from third parties, not employees.

The complaint also alleges that Lisser and his salespeople falsely claimed that Knightsbridge only charged investors a fee based on the profits after the pre-IPO companies went public, when instead it significantly marked up sales and charged commissions.

[More: SEC charges phony New Jersey adviser with $5 million fraud]