{"id":5297,"date":"2012-03-17T00:00:00","date_gmt":"2012-03-17T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/03\/sharespost_its_ceo_and_fund_ma"},"modified":"2022-04-28T12:19:30","modified_gmt":"2022-04-28T17:19:30","slug":"sharespost-its-ceo-and-fund-ma","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sharespost-its-ceo-and-fund-ma\/","title":{"rendered":"SharesPost, its CEO, and Fund Manager Settle with the SEC"},"content":{"rendered":"

The Securities and Exchange Commission says that it has reached a securities settlement<\/a> in its administrative proceeding against SharesPost. Along with its Chief Executive Officer Greg Brogger, the online platform that serves as a secondary market for pre-IPO shares will pay $100,000 in penalties.<\/p>\n

According to the SEC, SharesPost was matching up the sellers of private company stock and buyers even though it wasn\u2019t a registered broker-dealer. Also, the online service allegedly let other broker-dealers\u2019 registered representatives present themselves as SharesPost employees and make commissions on securities transactions, allowed one of its affiliates to manage pooled investment vehicles that were supposed to buy stock in single private firms and interests in funds that Sharespost made available, and published on the website third-party information about issuers\u2019 financial metrics, research reports, and a valuation index that it created.<\/p>\n

The SEC noted that although it is open to innovation in capital markets, products and new platforms have to abide by the rules, including making sure that basic disclosure and fairness occur. The Commission said that that broker-dealer registration is key in helping protect customers\u2014especially considering that there are risks involved in the secondary marketplace for pre-IPO stocks for even the most sophisticated investors.<\/p>\n

The Commission also settled its securities case against FB Financial Group and its fund manager Laurence Albukerk. The fund manager is accused of providing offering materials that did not let investors know he was making extra fees because he was buying Facebook shares using an entity that his wife controlled. Albukerk and his financial firm have agreed to pay pre-judgment interest plus disgorgement of $210,499 and $100,000 fine. Sharespost, Brogger, Albukerk, and FB Financial Group agreed to settle without denying or admitting to any wrongdoing.<\/p>\n

Meantime, in a related securities fraud lawsuit filed in civil court, the SEC accused Frank Mazzola and his financial firms Facie Libre Management Associates, LLC and Felix Investments of making secret commissions and taking part in improper self-dealing. Mazzola and the firms allegedly made a number of false statements to investors about offerings in Zynga, Facebook, and Twitter while not revealing that certain prices were raised as a result of commissions.<\/p>\n

Facie Libre also allegedly sold Facebook interests even though it didn\u2019t own some of these shares. Both of the firms and Mazzola are accused of misleading an investor into thinking they had acquired Zynga stock, as well as of making misrepresentations about Twitter revenue. This case is still open. Felix Investments and Mazzola have, however, settled a related but separate action with the Financial Industry Regulatory Authority with the firm consenting to pay a $250,000 fine and Mazzola a $30,000 fine.<\/p>\n

In the wake of electronic markets and Wall Street banks all rushing to present investors with an opportunity to trade stakes in popular technology companies prior to them going public, regulators and lawmakers have been more closely scrutinizing private share trading over the last year. That said, alternative online investment platforms, which are called \u201cshadow markets,” can be very risky.<\/p>\n

\u201cThe real shock is the lack of problems the SEC finds with such trading in pre-public shares,\u201d says Shepherd Smith Edwards and Kantas, LTD LLP Founder and stockbroker fraud lawyer William Shepherd.<\/a> \u201cThe penalties levied are only for firms not being licensed to sell securities engaging in such practices and\/or for \u2018self-dealing.\u2019 Meanwhile, this entire practice flies in the face of both the letter and intent of securities laws that have been on the books since the 1930\u2019s. Wall Street screams about new regulations while it ignores current ones. In driving terms, think of this as the police watching as drag races are being held in your neighborhood, ignoring red lights and stop signs on every corner, and being only concerned with whether the drivers are licensed.”<\/p>\n

SEC charges SharesPost, Felix over pre-IPO trading<\/a>, Reuters, March 14, 2012<\/p>\n

More Blog Posts:<\/strong><\/p>\n

Securities and Exchange Commission Charges Investment Adviser with Committing Securities Fraud on Linked In<\/a>, Stockbroker Fraud Blog, January 6, 2012<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Securities and Exchange Commission says that it has reached a securities settlement in its administrative proceeding against SharesPost. Along with its Chief Executive Officer Greg Brogger, the online platform that serves as a secondary market for pre-IPO shares will pay $100,000 in penalties. 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