SharesPost And Felix Charged By SEC
SharesPost, a company that deals with trading in the private capital markets, was charged by the SEC with failing to register as a broker-dealer before offering securities, according to a recent Reuters report.
The company and its CEO, Greg Brogger, did not admit or deny the allegations. The company will pay $80,000 in penalties while Brogger will pay $20,000.
Also, in San Francisco, the SEC brought a lawsuit against Frank Mazzola and his firms Felix Investments and Facie Libre Management Associates. Mazzola is charged with engaging with improper self-dealing and earning secret commissions. The case is ongoing.
The SEC argues that Mazzola lied to investors about its offerings in Facebook, Zynga and Twitter. The documents for the offering did not mention commission fees that raised prices for investors.
The SEC also states that Facie Libre failed to own certain Facebook shares, but sold the shares to investors. Mazzola and Felix Investments, his brokerage firm, settled a related action with the Financial Industry Regulatory Authority and did not admit or deny any wrongdoing.
The SEC started looking in at the world of private share trading a year ago, when Wall Street banks and electronic traders were offering investors a chance to invest in hot technology companies before they went public, reports Sarah N. Lynch and Aruna Viswanatha for Reuters.
Robert Khuzami, the director of the SEC’s enforcement division, told the reporters: “While we applaud innovation in the capital markets, new platforms and products must obey the rules and ensure the basic fairness and disclosure that are the hallmarks of sound financial regulation.”
SharesPost states that they had no customer complaints about the way they were doing business. They eventually registered as a broker-dealer last year while complying with all of the SEC’s requests during the probe.
SharesPost continued: “[They] concluded that it better serves its client by entering into this administrative settlement with the SEC, and believes its time, energy and resources are best spent continuing to build what has become the industry’s largest, most active platform during a crucial phase of its growth.”