SEC Charges NY Operator With $74M Pre-IPO Fraud
The SEC alleges Andrew Spaventa and his firms defrauded over 800 retail investors through hidden fees and high-pressure sales tactics in a pre-IPO investment scheme.
- SEC charged Andrew Spaventa and three entities with a $74 million fraud scheme.
- Over 800 retail investors were targeted via cold calls and high-pressure sales tactics.
- Investors paid hidden fees averaging 46% above the actual cost of pre-IPO shares.
- Approximately $23 million in fees was collected, with $12 million going to commissions.
- The SEC seeks disgorgement, civil penalties, and permanent injunctions.
The Securities and Exchange Commission has charged New York resident Andrew Spaventa and three entities he controlled with defrauding more than 800 retail investors out of $74 million.
According to the complaint filed in federal court, Spaventa’s firms raised funds for eleven private investment vehicles between December 2020 and June 2025. The scheme promised investors access to shares of private companies before they went public.
In reality, Spaventa purchased these pre-IPO shares at lower prices and sold them to his funds at marked-up rates. These markups were passed on to investors as hidden fees embedded in the cost of membership interests.
Spaventa used over 100 sales agents to cold-call prospective investors, many of whom were retirees. Agents employed high-pressure tactics and falsely claimed that upfront fees would be zero or capped at 12.5%. In truth, investors paid prices averaging 46% higher than what Spaventa paid for the underlying assets.
The fraud generated approximately $23 million in upfront fees. More than $12 million of this amount was distributed to sales agents as commissions, while roughly $4 million went directly to Spaventa.
Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, highlighted the predatory nature of the operation. "Unsolicited calls and high-pressure sales tactics are the calling cards of so-called boiler room operators," Pollock said. "They get you on the phone and then hit you with the hidden fees."
The SEC seeks permanent injunctions against all defendants, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The complaint also requests conduct-based injunctions specifically targeting Spaventa.
Charges include violations of antifraud provisions, securities registration rules, and broker-dealer registration requirements under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Spaventa faces additional charges for control person liability and aiding and abetting violations.
Corrections: [email protected]