THE
Securities and Exchange Commission (SEC
Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC) is one of the best-known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and limiting abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating United States stock and options exchanges.
The Securities and Exchange Commission (SEC) is one of the best-known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and limiting abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating United States stock and options exchanges.
Read this term) yesterday (Tuesday) confirmed that it has obtained a preliminary injunction and assets freeze against Legend Venture Partners LLC. The unregistered broker, based in New York, is involved in a fraudulent scheme surrounding the sale of interests in private companies ready for a public offering (IPO).
The case is similar to a scheme previously orchestrated by StraightPath Venture Partners LLC, which the SEC shut down last year. Notably, many of Legend’s directors and sales agents had previously been employed by StraightPath.
Boiler room operations under SEC control
According to The SEC Complaint, Legend operated boiler room business from February to October 2022 and sold securities issued by Legend funds. The Legend Funds invested in shares or stakes in specific pre-IPO companies. Boilerhouse, managed by a large network of unregistered sales agents, has made cold calls and raised at least $35 million from more than 300 investors.
Legend allegedly made a series of false statements to investors. These included claims that its sales agents received no upfront fees or commissions and that the company would only profit if the investor made a profit on an IPO.
Contrary to those claims, the SEC said Legend applied extreme, undisclosed mark-ups to the prices it paid for the pre-IPO shares. These increases averaged almost 60%, reaching up to 105% per share. The company also paid its sales agents and directors more than $12.8 million in initial compensation.
“We allege that just as the SEC was in the process of shutting down StraightPath, Defendant simply renamed this scheme and used StraightPath’s documents and sales agents to solicit and mislead investors about Legend’s compensation,” said Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, commented. “We have filed this emergency action to protect the victims of the alleged copycat scheme.”
Legal implications and other actions
The SEC accuses Legend of violating anti-fraud and certain registration provisions of federal securities laws. The commission is seeking a permanent injunction, a civil penalty and restitution of allegedly ill-gotten gains.
The U.S. District Court Judge for the Southern District of New York issued an order imposing a temporary restraining order, asset freeze and other restrictions. A preliminary injunction was granted on June 27 restraining Legend from violating the offending provisions of federal securities laws. The decision on the SEC’s request to appoint a receiver for Legend and the Legend Funds is currently pending.
Boiler rooms are a serious problem for the SEC
Boiler room scams are among the oldest investment fraud tactics, as perpetrators cold-call potential victims and persuade them to buy junk stocks. The operation of such a system was described in the 2013 film “The Wolf of Wall Street”.
The SEC has repeatedly warned against boiler rooms, financial pyramids, and Ponzi schemes in the past. These often victimize retail investors. One example is the FX Ponzi scheme, which the SEC reported earlier this week. The company owned by Sanjay Singh is accused of defrauding a total of 1,500 investors out of $112 million.
In the past, the creators of boiler rooms, even smaller than the one described above, were sentenced to long prison terms. One of them is Michael Nascimento, who was sentenced to 13 years in prison in 2018. More than a decade ago, he and his fellow scam artists cold called strangers to persuade them to buy stocks in a company that was supposed to own land in Madeira.
THE
Securities and Exchange Commission (SEC
Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC) is one of the best-known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and limiting abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating United States stock and options exchanges.
The Securities and Exchange Commission (SEC) is one of the best-known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and limiting abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating United States stock and options exchanges.
Read this term) yesterday (Tuesday) confirmed that it has obtained a preliminary injunction and assets freeze against Legend Venture Partners LLC. The unregistered broker, based in New York, is involved in a fraudulent scheme surrounding the sale of interests in private companies ready for a public offering (IPO).
The case is similar to a scheme previously orchestrated by StraightPath Venture Partners LLC, which the SEC shut down last year. Notably, many of Legend’s directors and sales agents had previously been employed by StraightPath.
Boiler room operations under SEC control
According to The SEC Complaint, Legend operated boiler room business from February to October 2022 and sold securities issued by Legend funds. The Legend Funds invested in shares or stakes in specific pre-IPO companies. Boilerhouse, managed by a large network of unregistered sales agents, has made cold calls and raised at least $35 million from more than 300 investors.
Legend allegedly made a series of false statements to investors. These included claims that its sales agents received no upfront fees or commissions and that the company would only profit if the investor made a profit on an IPO.
Contrary to those claims, the SEC said Legend applied extreme, undisclosed mark-ups to the prices it paid for the pre-IPO shares. These increases averaged almost 60%, reaching up to 105% per share. The company also paid its sales agents and directors more than $12.8 million in initial compensation.
“We allege that just as the SEC was in the process of shutting down StraightPath, Defendant simply renamed this scheme and used StraightPath’s documents and sales agents to solicit and mislead investors about Legend’s compensation,” said Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, commented. “We have filed this emergency action to protect the victims of the alleged copycat scheme.”
Legal implications and other actions
The SEC accuses Legend of violating anti-fraud and certain registration provisions of federal securities laws. The commission is seeking a permanent injunction, a civil penalty and restitution of allegedly ill-gotten gains.
The U.S. District Court Judge for the Southern District of New York issued an order imposing a temporary restraining order, asset freeze and other restrictions. A preliminary injunction was granted on June 27 restraining Legend from violating the offending provisions of federal securities laws. The decision on the SEC’s request to appoint a receiver for Legend and the Legend Funds is currently pending.
Boiler rooms are a serious problem for the SEC
Boiler room scams are among the oldest investment fraud tactics, as perpetrators cold-call potential victims and persuade them to buy junk stocks. The operation of such a system was described in the 2013 film “The Wolf of Wall Street”.
The SEC has repeatedly warned against boiler rooms, financial pyramids, and Ponzi schemes in the past. These often victimize retail investors. One example is the FX Ponzi scheme, which the SEC reported earlier this week. The company owned by Sanjay Singh is accused of defrauding a total of 1,500 investors out of $112 million.
In the past, the creators of boiler rooms, even smaller than the one described above, were sentenced to long prison terms. One of them is Michael Nascimento, who was sentenced to 13 years in prison in 2018. More than a decade ago, he and his fellow scam artists cold called strangers to persuade them to buy stocks in a company that was supposed to own land in Madeira.
