The Securities and Exchange Commission (SEC) has charged Scott Hollender, Gabriel Migliano Jr., and Frank Vecchio for illegally selling interests in shares of pre-IPO companies on behalf of StraightPath Venture Partners LLC without being registered as broker-dealers. The three defendants are also accused of misleading investors about the fees involved in these investments. Previously, the SEC had charged StraightPath Venture Partners, StraightPath Management LLC, and four of its principals in connection with a $410 million fraud in May 2022.
The SEC alleges that between November 2017 and November 2021, Hollender, Migliano, and Vecchio solicited investments for funds that were set up as series LLCs, which purported to acquire shares of a single pre-IPO company. Despite not being registered brokers, they allegedly provided investors with marketing materials, advised them on the supposed merits of the investments, and received transaction-based compensation, similar to a broker. The defendants collectively solicited at least $13 million in investments from at least 115 investors, and despite receiving upfront commissions of approximately 10 percent on successful investments, falsely told investors that there were no upfront fees. The defendants collectively received at least approximately $3.7 million in transaction-based compensation.
Antonia M. Apps, Director of the New York Regional Office, said, “StraightPath Venture Partners could not have cheated investors without the unregistered sales agents who fraudulently solicited them. The SEC will continue to hold individuals accountable for their wrongdoing, including a failure to register.”
The SEC has filed a complaint in the U.S. District Court for the Southern District of New York charging the defendants with violating antifraud and other provisions of the federal securities laws. The complaint seeks permanent injunctive relief, return of allegedly ill-gotten gains, and civil penalties. The complaint also includes GSH Empire Inc. and 21st Century Gold & Silver Inc., entities controlled by Hollender and Vecchio, respectively, as relief defendants to recover ill-gotten gains generated through their alleged conduct.
The SEC’s investigation is being conducted by the New York Regional Office and supervised by Sheldon L. Pollock. The litigation will be led by Megan R. Genet, Tian Wen, and Daniel Loss. The SEC is also being assisted by the Financial Industry Regulatory Authority, the Office of the Montana State Auditor, Commissioner of Securities and Insurance, and the New Jersey Bureau of Securities.
The SEC advises investors to be aware of the risks associated with unregistered investment professionals and recommends reading SEC investor bulletins, such as 10 Red Flags That An Unregistered Offering May Be A Scam and Private Placements Under Regulation D.
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