SEC Charges Andrew Spaventa and Entities in $74 Million Pre-IPO Fraud Scheme

The US Securities and Exchange Commission has charged New York resident Andrew Spaventa and three entities he controlled with defrauding more than 800 retail investors in a $74 million pre-IPO investment scheme. The complaint, filed in the US District Court for the Southern District of New York, alleges that the defendants raised capital through unregistered private offerings between December 2020 and June 2025.

According to the SEC, Spaventa, The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC solicited investments for eleven private funds using more than 100 sales agents. These agents allegedly employed high-pressure tactics and unsolicited calls to pitch the funds to thousands of prospective investors, many of whom were retirees.

The core of the alleged fraud involved the defendants purchasing pre-IPO shares directly or through another investment fund, then selling them to investor funds at marked-up prices. While investors were told upfront fees would be none or no more than 12.5 per cent, the markups resulted in hidden fees averaging approximately 46 per cent above the acquisition cost.

This structure allowed the defendants to collect roughly $23 million in upfront fees. The SEC alleges that more than $12 million of this sum was paid to sales agents as commissions, while approximately $4 million was directed to Spaventa personally.

The complaint charges the defendants with violating 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 faces additional charges for control person liability and aiding and abetting violations.

Sheldon L Pollock, Associate Director of the SEC’s New York Regional Office, highlighted the aggressive nature of the solicitation. He noted that unsolicited calls and high-pressure sales tactics are characteristic of boiler room operators who utilise hidden fees to exploit investors.

The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties from all defendants. Conduct-based injunctions are also sought against Spaventa.