The Securities and Exchange Commission has obtained asset freezes and other emergency relief measures against two investment firms and their principals for allegedly selling pre-IPO shares that they did not own.
StraightPath Venture Partners, StraightPath Management, Brian K. Martinsen, Michael A. Castillero, Francine A. Lanaia and Eric D. Lachow allegedly pocketed undisclosed fees and commingled investor funds, resulting in Ponzi scheme-like payments, the SEC charged. The relief arose from fraud and registration charges filed by the agency.
The SEC alleges that the defendants, running an unregistered broker-dealer, raised at least $410 million from more than 2,200 investors from November 2017 through February 2022. The SEC also alleges that the defendants repeatedly told investors that each investment would be kept separate and that they were charging no upfront fees.
Instead, the SEC said in a release, the defendants freely commingled investor funds, paid themselves more than $75 million, and paid their sales agents nearly $48 million from illegal, undisclosed markups on the pre-initial public offering shares that were, in some cases, as high as 100%. The SEC alleges that a share deficit exists of at least $14 million across the funds.
The defendants also allegedly concealed from investors that two of the three founders, Castillero and Lanaia, ran the funds despite having been barred from the brokerage industry. The Financial Industry Regulatory Authority Inc. barred Castillero in 2019 and Lanaia in 2018.
The complaint, filed in federal district court in New York, seeks permanent injunctive relief, return of allegedly ill-gotten gains and civil penalties.
Supervision vice chair speaks following recent launch of AI adoption practices by regulators.
In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.
Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.
Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.
Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
