SEC Alleges Pre-IPO Fraud Scheme

Andrew Spaventa, a resident of New York, is among the defendants named in the SEC's action.

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SEC Charges Andrew Spaventa, Three Firms With Fraud

According to the SEC, Spaventa and his entities targeted thousands of prospective investors, many of them retirees, using more than 100 sales agents to raise money for 11 funds.

Highlights

  • The SEC charged Andrew Spaventa and three entities with fraud and other violations.
  • Spaventa and the entities raised more than $74 million from more than 800 investors.
  • Defendants collected approximately $23 million in total upfront fees.
  • Spaventa personally received approximately $4 million in proceeds.
  • The case sits in Manhattan federal court, the Southern District of New York.

Alleged Markups and Fee Misstatements

The complaint states that Spaventa purchased pre-IPO shares directly or through another investment fund and sold them in principal transactions to his funds at marked-up prices.

Investors paid approximately 46% higher than the prices Spaventa paid for those shares.

The SEC alleges these markups were passed to investors as hidden fees charged on the sale of membership interests in the funds.

The agency also alleges the defendants told investors they would pay either no upfront fees at all or upfront fees of at most 12.5%.

Fees and Proceeds

Defendants collected approximately $23 million in total upfront fees, the SEC said.

Sales agents received more than $12 million in commissions.

Spaventa personally received approximately $4 million in proceeds.

Charges and Legal Proceedings

The SEC's complaint charges the defendants with violating the antifraud, securities registration, and broker-dealer registration provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940.

Spaventa also faces additional charges of control person liability and aiding and abetting violations.

The SEC brought the case in Manhattan federal court, sitting as the Southern District of New York.

The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains and prejudgment interest, and civil penalties from all defendants, and conduct-based injunctions against Spaventa.

“Unsolicited calls and high-pressure sales tactics are the calling cards of so-called boiler room operators. They get you on the phone and then hit you with the hidden fees.”

Sheldon L. Pollock, Associate Director of the SEC's New York Regional Office

Press Release Details

The SEC announced the charges in a press release dated Aug. 14, 2026, numbered 2026-75.