SEC settles with Florida firm over $410 million IPO-linked fraud
NEW YORK (Reuters) – The U.S. Securities and Trade Fee has reached a settlement with a Florida agency it mentioned raised at the least $410 million by fraudulently promising traders entry to personal firms that might conduct preliminary public choices.
In a courtroom submitting on Thursday, the SEC mentioned it had reached a “decision in precept” with StraightPath Enterprise Companions LLC, its three founders, and its fund supervisor over the lawsuit it filed earlier this month.
The SEC mentioned the Jupiter, Florida-based firm pitched its funding autos as a method for strange traders to personal hard-to-find pre-IPO shares in personal firms, resembling plant-based burger maker Unattainable Meals and cryptocurrency alternate Kraken – however typically didn’t even have the shares.
StraightPath raised the funds from greater than 2,200 traders in 14 international locations between November 2017 and February 2022, when it agreed to cease soliciting investments.
The fee mentioned the agency’s “exorbitant” charges allowed founders Michael Castillero, Francine Lanaia and Brian Martinsen and fund supervisor Eric Lachow to pay themselves about $75 million and their gross sales brokers practically $48 million.
A lawyer for StraightPath and the 4 particular person defendants didn’t instantly reply to a request for remark.
The decision concerned appointing a receiver to supervise recovering and distributing remaining funds and having three of the person defendants place hundreds of thousands of {dollars} in escrow, SEC lawyer Lee Greenwood wrote in a letter to U.S. District Decide Lewis Kaplan in Manhattan federal courtroom.
The settlement remains to be topic to SEC approval, anticipated by Could 31, Greenwood wrote.
(Reporting by Luc Cohen in New York; enhancing by Diane Craft)
