United States SEC Charged 3 Individuals & 6 Entities in $120 Million Pre-IPO Fraud from More than 900 Investors, Sold Interests in Private Funds, Lied About Investments & Received $16 Million in Commissions
4th October 2024 | Hong Kong
The United States Securities and Exchange Commission (SEC) has charged 3 individuals & 6 entities in $120 million pre-IPO fraud, raising capital from more than 900 investors, sold interests in private funds, lied about investments, and received $16 million in commissions. Hong Kong SFC (30/9/24): “The Securities and Exchange Commission today charged John LoPinto, Robert Wilkos, and Laren Pisciotti for their roles in a fraudulent scheme involving investments in pre-IPO private companies. The SEC also charged several companies owned and/or controlled by the defendants: the Pre IPO Marketplace Inc.; 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. The SEC complaint alleges that from at least October 2019 until December 2022, the defendants raised approximately $120 million from more than 900 investors in the U.S. and abroad by selling interests in private funds that supposedly held shares in pre-IPO companies, that is, privately held companies that had not yet conducted an initial public offering. The SEC alleges that the defendants, directly and through sales agents, told investors numerous lies about the supposed investments, including that there were no upfront fees in the investments while in fact paying themselves at least $16 million in commissions; that the funds were registered with the SEC when they were not; and that the funds owned shares in pre-IPO companies when they did not. In addition, according to the complaint, LoPinto used an alias to conduct business to hide his disciplinary history, which includes prior sanctions by the SEC and the Financial Industry Regulatory Authority, or FINRA. The complaint also alleges that many investors never received the pre-IPO shares that they were promised and for which they invested with the defendants. The SEC’s complaint charges the defendants with violating the antifraud and other provisions of the federal securities laws. The complaint, filed in the U.S. District Court for the Eastern District of New York, seeks permanent injunctive relief, return of allegedly ill-gotten gains together with prejudgment interest, and civil penalties from all defendants. The complaint also seeks industry and officer-and-director bars against LoPinto, Wilkos, and Pisciotti. Wilkos has agreed to settle the case and consent to injunctive relief, with the court determining additional remedies at a later date. The SEC’s ongoing investigation is being conducted by Randall D. Friedland, Elizabeth Doisy, Eleanor J.G. Wasserman, and Jeffrey Anderson and is supervised by Pei Y. Chung, Peter Rosario, and Ms. Bogert. The litigation will be led by John Timmer and Daniel Ball and supervised by James Connor.”
“ United States SEC Charged 3 Individuals & 6 Entities in $120 Million Pre-IPO Fraud from More than 900 Investors, Sold Interests in Private Funds, Lied About Investments & Received $16 Million in Commissions “
Investors can learn more about the risks of investing in pre-IPO offerings in this Investor Alert. The pre-IPO space remains a priority area for the Division of Enforcement. The SEC previously has filed charges in matters including:
- In August 2024, the Commission charged a China-based investment adviser, its US-based holding company, and CEO of both entities in a $6 million pre-IPO fraud.
- In December 2023, the Commission charged five individuals and four companies in a $528 million pre-IPO fraud.
- In August 2023, the Commission obtained emergency relief in a $4.2 million pre-IPO fraud.
- In June 2023, the Commission obtained emergency relief against an unregistered broker-dealer for a pre-IPO fraud. In June 2024, the Commission charged three individuals who worked on behalf of that broker-dealer in a $184 million pre-IPO fraud.
- In May 2022, the Commission obtained emergency relief to stop a $410 million pre-IPO fraud. In March 2023, the Commission charged three sales agents for selling interests in that pre-IPO fraud.
- In December 2020, the Commission charged a boiler room operator with defrauding retail investors in the sale of pre-IPO shares.
United States SEC Charged 3 Individuals & 6 Entities in $120 Million Pre-IPO Fraud from More than 900 Investors, Sold Interests in Private Funds, Lied About Investments & Received $16 Million in Commissions
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