SEC Obtains Emergency Relief to Halt Pre-IPO Stock Fraud Scheme by Unregistered Broker-Dealer
The SEC has obtained a preliminary injunction, asset freeze and other emergency relief against Legend Venture Partners LLC, an unregistered New York broker‑dealer
The SEC has obtained a preliminary injunction, asset freeze and other emergency relief against Legend Venture Partners LLC, an unregistered New York broker‑dealer. The agency alleges that from February‑October 2022 Legend ran a boiler‑room scheme that sold interests in pre‑IPO companies, raising at least $35 million from over 300 investors while falsely claiming no upfront fees and instead charging undisclosed mark‑ups averaging 60 % (up to 105 %) and paying sales agents more than $12.8 million in upfront compensation. Legend is charged with violating antifraud and registration provisions of the federal securities laws, and the SEC seeks permanent injunctive relief, return of ill‑gotten gains and a civil penalty. A U.S. District Court judge entered a temporary restraining order and, on June 27, 2023, a preliminary injunction enjoining Legend from further violations, pending further relief such as a possible receiver.
The SEC has obtained a preliminary injunction, asset freeze and other emergency relief against Legend Venture Partners LLC, an unregistered New York broker‑dealer. The agency alleges that from February‑October 2022 Legend ran a boiler‑room scheme that sold interests in pre‑IPO companies, raising at least $35 million from over 300 investors while falsely claiming no upfront fees and instead charging undisclosed mark‑ups averaging 60 % (up to 105 %) and paying sales agents more than $12.8 million in upfront compensation. Legend is charged with violating antifraud and registration provisions of the federal securities laws, and the SEC seeks permanent injunctive relief, return of ill‑gotten gains and a civil penalty. A U.S. District Court judge entered a temporary restraining order and, on June 27, 2023, a preliminary injunction enjoining Legend from further violations, pending further relief such as a possible receiver. The SEC obtained emergency relief against Legend Venture Partners LLC, a New York-based unregistered broker-dealer, for operating a fraudulent boiler room scheme that raised at least $35 million from over 300 investors through deceptive sales of pre-IPO securities. Allegedly rebranding a prior scheme shut down in 2022 by StraightPath Venture Partners—using the same principals, agents, and documents—Legend falsely claimed no upfront commissions and that profits were shared with investors, while secretly charging 60–105% markups on shares and paying over $12.8 million in undisclosed upfront compensation to agents and principals. The SEC charged Legend with violating antifraud and registration provisions of federal securities laws and sought permanent injunctions, disgorgement of ill-gotten gains, and civil penalties. On June 27, 2023, Judge Lewis A. Kaplan granted a preliminary injunction halting Legend’s operations, freezing its assets, and reserving judgment on appointing a receiver. The SEC’s ongoing investigation is led by its New York Regional Office’s Asset Management Unit. The SEC obtained emergency relief against Legend Venture Partners LLC, a New York-based unregistered broker-dealer, for operating a fraudulent boiler room scheme that raised at least $35 million from over 300 investors through deceptive sales of pre-IPO securities. Allegedly rebranding a prior scheme shut down in 2022 by StraightPath Venture Partners—using the same principals, agents, and documents—Legend falsely claimed no upfront commissions and that profits were shared with investors, while secretly charging 60–105% markups on shares and paying over $12.8 million in undisclosed compensation to agents and principals. The SEC charged Legend with violating antifraud and registration provisions of federal securities laws and sought permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties. On June 27, 2023, Judge Lewis A. Kaplan granted a preliminary injunction halting Legend’s operations, freezing its assets, and reserving judgment on appointing a receiver. The SEC’s ongoing investigation is led by its New York Regional Office’s Asset Management Unit.
Exhibits & Attached Documents (1)
Extracted insights
- $35.00M $35 million $10M–$100M
- $12.80M $12.8 million $10M–$100M
- scheme_term boiler room operations that sold securities issued by the legend funds
- scheme_term boiler rooms
- agency Securities and Exchange Commission
- company similar scheme by straightpath venture partners llc
- Securities And Exchange Commission Obtained Preliminary injunction, asset freeze, and other emergency relief against Legend Venture Partners LLC
- Securities And Exchange Commission Shut Down Similar scheme by StraightPath Venture Partners LLC
- Legend Ran Boiler room operations that sold securities issued by the Legend Funds
- Boiler Rooms Raised At least $35 million from more than 300 investors
- Legend Charged Exorbitant, undisclosed markups to the prices of Pre-IPO shares
- Legend Paid More than $12.8 million in upfront compensation to its sales agents and principals
- Judge Lewis A Kaplan Entered An order on June 23, 2023 imposing a temporary restraining order, asset freeze, and other relief
- Judge Lewis A Kaplan Granted A preliminary injunction enjoining Legend from violating the charged provisions of the federal securities laws
- SEC Is Conducted By Joshua D. Tannen, Lee A Greenwood, Suzanne M. Bettis, Megan Genet, Tiantong Wen, Douglas Smith, Kerri L. Palen, Patricia Schrage, Daniel Loss, Alistaire Bambach, and Steven G. Rawlings
The Securities and Exchange Commission today announced that it obtained a preliminary injunction, asset freeze, and other emergency relief against Legend Venture Partners LLC, a New York City-based unregistered broker-dealer, in connection with a fraudulent scheme involving the sale of interests in private companies that had the potential for a public offering. Last year, the SEC shut down a similar scheme by StraightPath Venture Partners LLC, for which Legend’s principals and many of its sales agents had previously worked. The SEC’s complaint, filed on June 22, 2023, alleges that, from February through October 2022, Legend ran boiler room operations that sold securities issued by the Legend Funds, which invested in shares or interests in shares of specific pre-IPO companies. The boiler rooms were staffed by a vast network of unregistered sales agents who made cold calls and raised at least $35 million from more than 300 investors. Among a number of alleged misstatements, Legend told investors that its sales agents did not receive upfront fees or commissions and that the firm only made money if the investor made a profit on an IPO. In reality, however, Legend charged exorbitant, undisclosed markups to the prices it paid for the Pre-IPO shares, which averaged almost 60 percent, and reached as high as 105 percent per share, and paid its sales agents and principals more than $12.8 million in upfront compensation. “We allege that, just as the SEC was in the process of shutting down StraightPath, the defendant simply rebranded that scheme and used StraightPath’s documents and sales agents to solicit and deceive investors about Legend’s compensation,” said Sheldon L. Pollock, Associate Director of the New York Regional Office. “We filed this emergency action to protect victims of the alleged copy-cat scheme.” The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges Legend with violating the antifraud and certain registration provisions of the federal securities laws and seeks permanent injunctive relief, the return of allegedly ill-gotten gains, and a civil penalty. The Hon. Lewis A Kaplan, U.S. District Court Judge for the Southern District of New York, entered an order on June 23, 2023, imposing a temporary restraining order, asset freeze, and other relief. At a hearing held on June 27, 2023, Judge Kaplan granted a preliminary injunction enjoining Legend from violating the charged provisions of the federal securities laws, reserving decision on the SEC’s request to appoint a receiver over Legend and the Legend Funds. The SEC’s ongoing investigation is being conducted by Joshua D. Tannen and Lee A. Greenwood of the Asset Management Unit and Suzanne M. Bettis, Megan Genet, Tiantong Wen, Douglas Smith, Kerri L. Palen, Patricia Schrage, Daniel Loss, Alistaire Bambach, and Steven G. Rawlings of the New York Regional Office. It is being supervised by Mr. Pollock. The litigation will be led by Mr. Loss, Mr. Tannen, and Ms. Bettis. Investors can learn more about the risks involved with investing in unregistered offerings by reading such SEC investor bulletins as 10 Red Flags That An Unregistered Offering May Be A Scam.
The Securities and Exchange Commission today announced that it obtained a preliminary injunction, asset freeze, and other emergency relief against Legend Venture Partners LLC, a New York City-based unregistered broker-dealer, in connection with a fraudulent scheme involving the sale of interests in private companies that had the potential for a public offering. Last year, the SEC shut down a similar scheme by StraightPath Venture Partners LLC, for which Legend’s principals and many of its sales agents had previously worked. The SEC’s complaint, filed on June 22, 2023, alleges that, from February through October 2022, Legend ran boiler room operations that sold securities issued by the Legend Funds, which invested in shares or interests in shares of specific pre-IPO companies. The boiler rooms were staffed by a vast network of unregistered sales agents who made cold calls and raised at least $35 million from more than 300 investors. Among a number of alleged misstatements, Legend told investors that its sales agents did not receive upfront fees or commissions and that the firm only made money if the investor made a profit on an IPO. In reality, however, Legend charged exorbitant, undisclosed markups to the prices it paid for the Pre-IPO shares, which averaged almost 60 percent, and reached as high as 105 percent per share, and paid its sales agents and principals more than $12.8 million in upfront compensation. “We allege that, just as the SEC was in the process of shutting down StraightPath, the defendant simply rebranded that scheme and used StraightPath’s documents and sales agents to solicit and deceive investors about Legend’s compensation,” said Sheldon L. Pollock, Associate Director of the New York Regional Office. “We filed this emergency action to protect victims of the alleged copy-cat scheme.” The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges Legend with violating the antifraud and certain registration provisions of the federal securities laws and seeks permanent injunctive relief, the return of allegedly ill-gotten gains, and a civil penalty. The Hon. Lewis A Kaplan, U.S. District Court Judge for the Southern District of New York, entered an order on June 23, 2023, imposing a temporary restraining order, asset freeze, and other relief. At a hearing held on June 27, 2023, Judge Kaplan granted a preliminary injunction enjoining Legend from violating the charged provisions of the federal securities laws, reserving decision on the SEC’s request to appoint a receiver over Legend and the Legend Funds. The SEC’s ongoing investigation is being conducted by Joshua D. Tannen and Lee A. Greenwood of the Asset Management Unit and Suzanne M. Bettis, Megan Genet, Tiantong Wen, Douglas Smith, Kerri L. Palen, Patricia Schrage, Daniel Loss, Alistaire Bambach, and Steven G. Rawlings of the New York Regional Office. It is being supervised by Mr. Pollock. The litigation will be led by Mr. Loss, Mr. Tannen, and Ms. Bettis. Investors can learn more about the risks involved with investing in unregistered offerings by reading such SEC investor bulletins as 10 Red Flags That An Unregistered Offering May Be A Scam.