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.
Pre-IPO investment fraud is a key priority for the SEC, which earlier in the year described an alleged pre-IPO share sales fraud as being 'like a Hollywood movie'.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
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.
