In re EQUITY ACQUISITION

 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 97035 / March 3, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-21326 
 
In the Matter of 
 
EQUITY ACQUISITION 
COMPANY LTD. and 
CARSTEN KLEIN 
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against Equity Acquisition Company Ltd. (“EAC”) and 
Carsten Klein (“Klein” and, together with EAC, “Respondents”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondents have submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are 
admitted, and except as provided herein in Section V, Respondent consents to the entry of this 
Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities 
Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set 
forth below.   
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
1. EAC is a trust organized under the laws of Bermuda.  EAC’s sole shareholder is 
Church Bay Trust Co. Ltd., a Bermuda limited liability company.  EAC is in the business of 
buying shares of private companies and selling them for a profit to private funds in the United 
States and abroad.  EAC is not registered pursuant to Section 15(a) of the Securities Exchange Act 
of 1934 (the “Exchange Act”). 
 
 2. Klein is a citizen of Germany and lawful permanent resident of the United States 
residing in Parkland, Florida.  Klein is the founder of EAC and controls EAC’s day-to-day 
operations.  In that role, Klein interacts with funds and individuals in the United States and abroad 
on EAC’s behalf, negotiates the purchase and sale of private company shares on EAC’s behalf, and 
enters into agreements with sellers and purchasers of shares on EAC’s behalf.  Klein is not 
registered pursuant to Section 15(a) of the Exchange Act or associated with a registered broker-
dealer. 
 
 3. Since at least 2019, EAC has been in the business of acquiring shares in U.S. 
private companies and selling them for a profit to funds located in the United States and abroad.  
The private companies whose shares Klein targets are companies believed to be contemplating a 
near-term liquidity event, such as a merger or initial public offering (“Pre-IPO Companies”), and 
the funds that Klein sells to are funds in the United States and abroad that focus their investments 
in pre-IPO Companies.  
 
 4. To date, Klein has conducted transactions in at least 30 different pre-IPO 
companies, including highly anticipated offerings such as Palantir, Pinterest, 23andMe, TopGolf 
and Social Finance Inc.  In each case, Klein or an associate of Klein’s identified a willing seller, 
negotiated a purchase price, and worked through the legal process to acquire the shares.  In some 
instances, EAC purchased the shares directly and worked with the Pre-IPO Company to have EAC 
listed on the company’s capitalization table.  In other instances, EAC entered into a forward 
contract with the seller that gave EAC the right to the shares following a liquidity event. 
 
 5. Following EAC’s purchase of shares or entry into a forward contract, EAC 
identified funds that were interested in buying the shares.  EAC has sold to at least 10 different pre-
IPO funds or holding companies, most of which were located in the United States.  Klein operated 
EAC out of Florida, purchased shares from individuals and entities located throughout the United 
States, and sold to funds operating, among other places, in New York and New Jersey.  Klein 
negotiated the quantity and price for the shares with the funds, and entered into a nomination 
agreement that obligated EAC to transfer the shares to the funds upon the occurrence of the 
                                                
1
  The findings herein are made pursuant to Respondents’ Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.   
 
 

 3 
liquidity event.  EAC’s profit was the difference between the price for which it purchased the 
shares and the price for which it sold the shares. 
 
 6. Since 2019, EAC has purchased more than 14 million private company shares and 
sold more than 13.4 million shares to different pre-IPO funds or holding companies.  In doing so, 
EAC has exhibited a regularity of participation in the securities business well in excess of a few 
isolated transactions.  In addition, EAC buys and sells the securities as principal (i.e., not as an 
agent for the funds), carries a regular inventory of shares, and makes a market in the price of the 
shares through its negotiated pricing.  In each of those instances, EAC has transacted business as a 
Dealer as that term is defined in Section 3(a)(5) of the Exchange Act.   
 
 7. As a result of the conduct described above, EAC and Klein violated Section 
15(a)(1) of the Exchange Act, which makes it unlawful for any broker or dealer which is either a 
person other than a natural person or a natural person not associated with a broker or dealer which 
is a person other than a natural person to make use of the mails or any means or instrumentality of 
interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale 
of, any security, unless such broker or dealer is registered in accordance with Section 15(b) of the 
Exchange Act.   
 
Undertakings 
 
 Respondents have undertaken to: 
 
 8. Use best efforts to register EAC, or another broker-dealer to serve as successor in 
interest to EAC, pursuant to Section 15(b) of the Exchange Act and for Klein to become an 
associated person of EAC or such successor in interest, following successful registration; 
 
 9. If EAC is not registered within two years, or if Klein establishes a successor in 
interest to EAC that becomes registered during that time, take all steps necessary to effect an 
immediate transfer of all shares and forward contracts for shares in EAC’s possession, along with 
an assignment of all rights and interests in those shares and forward contracts, without profit to 
EAC or Klein, to such registered successor in interest or another registered broker-dealer not 
unacceptable to the Commission for purposes of lawfully distributing the shares upon the 
occurrence of a liquidity event; 
 
 10. In the interim period while Respondents are seeking registration of EAC or its 
successor in interest, to the extent a liquidity event occurs that would require distribution of shares, 
take all steps necessary to effect an immediate transfer of the shares required for distribution, along 
with an assignment of all rights and interests in those shares, without profit to EAC or Klein, to a 
registered broker-dealer not unacceptable to the Commission for purposes of lawfully distributing 
the shares subject to the liquidity event; and 
 
 11. Cooperate fully with the Commission in any and all investigations, litigations, 
administrative or other proceedings relating to or arising from the matters described in this Order. 
In connection with such investigations, litigations, administrative or other proceedings, Respondent 

 4 
agrees to the following: (i) to produce, without service of a notice or subpoena, any and all 
documents and other materials or information as requested; (ii) to appear and testify without 
service of a notice or subpoena in such investigations, interviews, depositions, hearings and trials, 
at such times and places as reasonably requested; and (iii) to respond promptly to all inquiries. 
 
 12. In determining whether to accept the Offer, the Commission has considered the 
undertakings contained in paragraph 11, above.  
 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent EAC and Klein’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondents cease and desist from 
committing or causing any violations and any future violations of Section 15(a)(1) of the Exchange 
Act.   
 
 B. Respondents shall  comply  with  the  undertakings  enumerated  in paragraphs  8 
through 10, above.  
 
 C. Respondents   shall   pay   disgorgement   of   $3,363,526,   prejudgment   interest   of 
$284,550.18 and civil penalties of $269,360, jointly and severally, to the Securities and Exchange 
Commission or transfer to the general fund of the United States Treasury, subject to Exchange Act 
Section  21F(g)(3).    Payment  shall  be  made  in  the  following  installments:    $1,000,000  within  14 
days of the entry of the Order, $972,479 within 120 days of the Order, $972,479 within 240 days 
of  the  Order,  and  final  payment  within  360  days  of  the  entry  of  this  Order.    Payments  shall  be 
applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717 and Commission Rule 
of Practice 600.  Prior to making the final payment set forth herein, Respondents shall contact the 
staff of the Commission for the amount due.  If Respondents fail to make any payment by the date 
agreed  and/or  in  the  amount  agreed  according  to  the  schedule  set  forth  above,  all  outstanding 
payments under the Order, including post-order interest, minus any payments made, shall become 
due  and  payable  immediately  at  the  discretion  of  the  staff  of  the  Commission  without  further 
application to the Commission.  
 
 Payment must be made in one of the following ways:   
 
(1) Respondents may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondents may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 5 
 
(3) Respondents may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Carsten Klein and EAC as Respondents in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to David Becker, 
Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549.   
 
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondents agree that in any Related Investor 
Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction of 
any award of compensatory damages by the amount of any part of Respondents’ payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondents agrees that they shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 
the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondents by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 
Klein, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts 
due by Klein under this Order or any other judgment, order, consent order, decree or settlement 
agreement entered in connection with this proceeding, is a debt for the violation by Klein of the 
federal securities laws or any regulation or order issued under such laws, as set forth in Section 
523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
 
 
 By the Commission. 
 
 

 6 
 
Vanessa A. Countryman 
Secretary 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 97035 / March 3, 2023 

 

ADMINISTRATIVE PROCEEDING 

File No.  3-21326 

 

In the Matter of 

 

EQUITY ACQUISITION 

COMPANY LTD. and 

CARSTEN KLEIN 

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER 

  

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against Equity Acquisition Company Ltd. (“EAC”) and 

Carsten Klein (“Klein” and, together with EAC, “Respondents”).   

 

II. 

 

 In anticipation of the institution of these proceedings, Respondents have submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are 

admitted, and except as provided herein in Section V, Respondent consents to the entry of this 

Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities 

Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set 

forth below.   

 



 2 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

1. EAC is a trust organized under the laws of Bermuda.  EAC’s sole shareholder is 

Church Bay Trust Co. Ltd., a Bermuda limited liability company.  EAC is in the business of 

buying shares of private companies and selling them for a profit to private funds in the United 

States and abroad.  EAC is not registered pursuant to Section 15(a) of the Securities Exchange Act 

of 1934 (the “Exchange Act”). 

 

 2. Klein is a citizen of Germany and lawful permanent resident of the United States 

residing in Parkland, Florida.  Klein is the founder of EAC and controls EAC’s day-to-day 

operations.  In that role, Klein interacts with funds and individuals in the United States and abroad 

on EAC’s behalf, negotiates the purchase and sale of private company shares on EAC’s behalf, and 

enters into agreements with sellers and purchasers of shares on EAC’s behalf.  Klein is not 

registered pursuant to Section 15(a) of the Exchange Act or associated with a registered broker-

dealer. 

 

 3. Since at least 2019, EAC has been in the business of acquiring shares in U.S. 

private companies and selling them for a profit to funds located in the United States and abroad.  

The private companies whose shares Klein targets are companies believed to be contemplating a 

near-term liquidity event, such as a merger or initial public offering (“Pre-IPO Companies”), and 

the funds that Klein sells to are funds in the United States and abroad that focus their investments 

in pre-IPO Companies.  

 

 4. To date, Klein has conducted transactions in at least 30 different pre-IPO 

companies, including highly anticipated offerings such as Palantir, Pinterest, 23andMe, TopGolf 

and Social Finance Inc.  In each case, Klein or an associate of Klein’s identified a willing seller, 

negotiated a purchase price, and worked through the legal process to acquire the shares.  In some 

instances, EAC purchased the shares directly and worked with the Pre-IPO Company to have EAC 

listed on the company’s capitalization table.  In other instances, EAC entered into a forward 

contract with the seller that gave EAC the right to the shares following a liquidity event. 

 

 5. Following EAC’s purchase of shares or entry into a forward contract, EAC 

identified funds that were interested in buying the shares.  EAC has sold to at least 10 different pre-

IPO funds or holding companies, most of which were located in the United States.  Klein operated 

EAC out of Florida, purchased shares from individuals and entities located throughout the United 

States, and sold to funds operating, among other places, in New York and New Jersey.  Klein 

negotiated the quantity and price for the shares with the funds, and entered into a nomination 

agreement that obligated EAC to transfer the shares to the funds upon the occurrence of the 

                                                
1  The findings herein are made pursuant to Respondents’ Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.   

 

 



 3 

liquidity event.  EAC’s profit was the difference between the price for which it purchased the 

shares and the price for which it sold the shares. 

 

 6. Since 2019, EAC has purchased more than 14 million private company shares and 

sold more than 13.4 million shares to different pre-IPO funds or holding companies.  In doing so, 

EAC has exhibited a regularity of participation in the securities business well in excess of a few 

isolated transactions.  In addition, EAC buys and sells the securities as principal (i.e., not as an 

agent for the funds), carries a regular inventory of shares, and makes a market in the price of the 

shares through its negotiated pricing.  In each of those instances, EAC has transacted business as a 

Dealer as that term is defined in Section 3(a)(5) of the Exchange Act.   

 

 7. As a result of the conduct described above, EAC and Klein violated Section 

15(a)(1) of the Exchange Act, which makes it unlawful for any broker or dealer which is either a 

person other than a natural person or a natural person not associated with a broker or dealer which 

is a person other than a natural person to make use of the mails or any means or instrumentality of 

interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale 

of, any security, unless such broker or dealer is registered in accordance with Section 15(b) of the 

Exchange Act.   

 

Undertakings 

 

 Respondents have undertaken to: 

 

 8. Use best efforts to register EAC, or another broker-dealer to serve as successor in 

interest to EAC, pursuant to Section 15(b) of the Exchange Act and for Klein to become an 

associated person of EAC or such successor in interest, following successful registration; 

 

 9. If EAC is not registered within two years, or if Klein establishes a successor in 

interest to EAC that becomes registered during that time, take all steps necessary to effect an 

immediate transfer of all shares and forward contracts for shares in EAC’s possession, along with 

an assignment of all rights and interests in those shares and forward contracts, without profit to 

EAC or Klein, to such registered successor in interest or another registered broker-dealer not 

unacceptable to the Commission for purposes of lawfully distributing the shares upon the 

occurrence of a liquidity event; 

 

 10. In the interim period while Respondents are seeking registration of EAC or its 

successor in interest, to the extent a liquidity event occurs that would require distribution of shares, 

take all steps necessary to effect an immediate transfer of the shares required for distribution, along 

with an assignment of all rights and interests in those shares, without profit to EAC or Klein, to a 

registered broker-dealer not unacceptable to the Commission for purposes of lawfully distributing 

the shares subject to the liquidity event; and 

 

 11. Cooperate fully with the Commission in any and all investigations, litigations, 

administrative or other proceedings relating to or arising from the matters described in this Order. 

In connection with such investigations, litigations, administrative or other proceedings, Respondent 



 4 

agrees to the following: (i) to produce, without service of a notice or subpoena, any and all 

documents and other materials or information as requested; (ii) to appear and testify without 

service of a notice or subpoena in such investigations, interviews, depositions, hearings and trials, 

at such times and places as reasonably requested; and (iii) to respond promptly to all inquiries. 

 

 12. In determining whether to accept the Offer, the Commission has considered the 

undertakings contained in paragraph 11, above.  

 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent EAC and Klein’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, Respondents cease and desist from 

committing or causing any violations and any future violations of Section 15(a)(1) of the Exchange 

Act.   

 

 B. Respondents shall comply with the undertakings enumerated in paragraphs 8 

through 10, above.  

 

 C. Respondents shall pay disgorgement of $3,363,526, prejudgment interest of 

$284,550.18 and civil penalties of $269,360, jointly and severally, to the Securities and Exchange 

Commission or transfer to the general fund of the United States Treasury, subject to Exchange Act 

Section 21F(g)(3).  Payment shall be made in the following installments:  $1,000,000 within 14 

days of the entry of the Order, $972,479 within 120 days of the Order, $972,479 within 240 days 

of the Order, and final payment within 360 days of the entry of this Order.  Payments shall be 

applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717 and Commission Rule 

of Practice 600.  Prior to making the final payment set forth herein, Respondents shall contact the 

staff of the Commission for the amount due.  If Respondents fail to make any payment by the date 

agreed and/or in the amount agreed according to the schedule set forth above, all outstanding 

payments under the Order, including post-order interest, minus any payments made, shall become 

due and payable immediately at the discretion of the staff of the Commission without further 

application to the Commission.  

 

 Payment must be made in one of the following ways:   

 

(1) Respondents may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondents may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

http://www.sec.gov/about/offices/ofm.htm


 5 

 

(3) Respondents may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Carsten Klein and EAC as Respondents in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to David Becker, 

Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 

Washington, DC 20549.   

 

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondents agree that in any Related Investor 

Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction of 

any award of compensatory damages by the amount of any part of Respondents’ payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondents agrees that they shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondents by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Klein, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts 

due by Klein under this Order or any other judgment, order, consent order, decree or settlement 

agreement entered in connection with this proceeding, is a debt for the violation by Klein of the 

federal securities laws or any regulation or order issued under such laws, as set forth in Section 

523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 

 

 

 By the Commission. 

 

 



 6 

 

Vanessa A. Countryman 

Secretary