SEC charges Spaventa entities over $74 million pre-IPO fund fraud

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SEC charges pre-IPO fund fraud

Highlights

The SEC charged Andrew Spaventa and affiliated entities with fraud over $74 million in unregistered private fund offerings from December 2020 to June 2025.
Defendants allegedly marked up pre-IPO shares and charged investors hidden fees averaging 46% above costs, raising around $23 million in upfront fees.
Over 100 sales agents used cold calls and high-pressure tactics, collecting over $12 million in commissions, with Spaventa personally receiving about $4 million.

Alleged scheme and regulatory action

As reported by the Securities and Exchange Commission, Andrew Spaventa, The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC are charged with fraud and other violations tied to unregistered offerings of eleven private funds between about December 2020 and June 2025.

The SEC alleges the defendants raised more than $74 million by offering investors access to shares in private companies before initial public offerings. Through entities he owned, Spaventa allegedly bought those shares directly or through another investment fund and then resold them to his funds at marked-up prices, with those markups passed on to investors as hidden fees.

The complaint, filed in the U.S. District Court for the Southern District of New York, includes alleged violations of antifraud, securities registration, and broker-dealer registration provisions under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. It also alleges control person liability and aiding and abetting violations against Spaventa, while seeking permanent injunctions, disgorgement, prejudgment interest, civil penalties, and conduct-based injunctions.

Investor impact and sales tactics

The SEC says the operation used more than 100 sales agents to cold call thousands of prospective investors, including many retirees, and relied on high-pressure tactics commonly associated with boiler room activity. Sheldon L. Pollock, associate director of the SEC's New York Regional Office, says unsolicited calls and hidden fees are hallmark risks in such schemes and urges investors to remain vigilant.

According to the allegations, investors were told they would pay no upfront fees or fees capped at 12.5%, but the prices they paid were on average about 46% above Spaventa's acquisition cost for the investments. The SEC says that led to roughly $23 million in upfront fees, with more than $12 million going to sales agents as commissions and about $4 million going to Spaventa personally.

Our earlier coverage of the SEC’s proposed changes to its pay-to-play rule explained that the agency was seeking to ease restrictions that can bar investment advisers from earning fees on public pension mandates after political contributions. We noted the proposal was framed as a way to reduce compliance burdens, but it also raised concerns that loosening safeguards could increase corruption risks in state and local pension business.

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