The Securities and Exchange Commission has charged a New York businessman and three affiliated entities with operating an alleged boiler-room scheme that raised more than $74 million from investors seeking access to shares of privately held companies before their anticipated initial public offerings.
According to the SEC, Andrew Spaventa and three entities he allegedly controlled—The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC—raised the money from more than 800 investors nationwide between approximately December 2020 and June 2025. Most of the investors were retail investors, including retirees.
The SEC alleges that the defendants created and marketed 11 private investment funds that purportedly offered opportunities to invest in pre-IPO companies. Spaventa allegedly acquired private-company shares, either directly or through other investment funds, and then resold those investments to the affiliated funds at substantially higher prices.
SEC Alleges Undisclosed Markups and Fees
The central issue in the SEC’s case is not simply whether the underlying pre-IPO investments were legitimate. Rather, the agency alleges that investors were misled about the prices they were paying and the compensation received by the defendants and their sales force.
According to the complaint, prospective investors were told that the investments carried either no upfront fees or fees of no more than 12.5 percent. In reality, the SEC alleges, investors paid prices averaging approximately 46 percent more than the defendants had paid for the investments.
The agency claims that the defendants collected approximately $23 million through these alleged markups. More than $12 million allegedly went to sales agents as commissions, while approximately $4 million allegedly went to Spaventa personally.
More Than 100 Sales Agents Allegedly Used Cold Calls
The SEC also alleges that the defendants employed more than 100 sales agents who cold-called thousands of prospective investors and used high-pressure sales tactics to sell interests in the funds.
These allegations raise questions about more than investment pricing and disclosure. The SEC’s complaint also asserts that the defendants violated federal broker-dealer registration requirements by using individuals to solicit investments and receive transaction-based compensation without the required registration.
“Pre-IPO investments can be particularly difficult for retail investors to evaluate because there may be no public market price, limited financial information, and several layers of intermediaries,” said securities attorney Mark J. Astarita. “When salespeople use cold calls, urgency, or claims of exclusive access while failing to clearly disclose markups and commissions, investors should stop and independently verify both the investment and the people selling it.”
Astarita added that large undisclosed markups may become significant evidence in an SEC enforcement action, particularly when investors were given materially different information about fees or sales compensation.
SEC Seeks Injunctions, Disgorgement and Penalties
The SEC filed its complaint in the United States District Court for the Southern District of New York. The complaint alleges violations of 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 is also charged with control-person liability and aiding and abetting alleged violations.
The SEC is seeking:
- Permanent injunctions;
- Disgorgement of allegedly ill-gotten gains;
- Prejudgment interest;
- Civil monetary penalties; and
- Conduct-based injunctions against Spaventa.
The allegations have not yet been proven, and the defendants are entitled to contest the SEC’s claims in court.
Warning Signs in Pre-IPO Offerings
Investors considering a pre-IPO investment should determine:
- Whether the salesperson and offering participants are properly registered;
- How the investment was acquired and whether its price has been marked up;
- What commissions, placement fees, or other compensation will be paid;
- Whether the investor will own shares directly or only an interest in an intermediary fund;
- What restrictions apply to transferring or selling the investment; and
- Whether an IPO is actually planned or merely speculative.
Promises of special access to a well-known private company should not substitute for independently verified information concerning ownership, valuation, fees, liquidity, and risk.
Securities Enforcement and Regulatory Counsel
Mark J. Astarita represents financial professionals, investment advisers, broker-dealers, public companies, and investors in SEC investigations, enforcement proceedings, FINRA matters, and securities litigation. He has represented clients in securities regulatory matters for more than 30 years.
Sallah Astarita & Cox, LLC is a national securities law firm representing clients in SEC and FINRA investigations, securities arbitrations, regulatory proceedings, and compliance matters. For additional information, visit SECLaw.com.
This article discusses allegations contained in an SEC complaint. The allegations have not been adjudicated, and all defendants are presumed not liable unless and until liability is established.
Source: SEC Press Release No. 2026-75, issued August 14, 2026.
For more information, contact the securities lawyers at Sallah Astarita & Cox, at 212-509-6544 or visit Securities Lawyer
Last updated on August 22nd, 2026
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