SEC Targets Five Brokers in $525M Investment Fraud Scheme

<p>The Securities and Exchange Commission (SEC) has
charged five individuals and four entities allegedly involved in a significant
fraud scheme involving pre-initial public offering (IPO) investments. </p><p>The accused include Raymond J. Pirrello, Jr.,
Marcello Follano, Robert Cassino, Anthony DiTucci, Joseph Rivera, and their
respective companies. The defendants allegedly engaged in deceptive practices leading
to over $525 million in unregistered offerings. </p><p>These offerings drew investments from more than
4,000 individuals globally, promising no upfront fees while charging
undisclosed markups. This resulted in illicit profits exceeding $88 million for
the defendants and their network.</p><p>SEC's Allegations of Investor Deception</p><p>Sheldon Pollock, the Associate Regional Director in
the New York Regional Office, mentioned: “As alleged in our complaint, the
defendants sold unregistered securities to investors based on false promises of
no upfront fees when they siphoned off tens of millions from such undisclosed
fees for themselves.”</p><p>The defendants allegedly orchestrated a widespread
network of unregistered sales agents, misleading investors by falsely asserting
the absence of upfront fees. Instead, investors faced substantial undisclosed
markups as high as 150 percent, ultimately benefiting the defendants and their
sales agents. </p><p>The accused individuals allegedly concealed Pirrello
Jr.'s involvement, hiding his past sanctioned by the SEC related to insider
trading. The <a href="https://www.financemagnates.com/tag/securities-and-exchange-commission/" target="_blank" rel="follow">SEC</a>'s complaint, filed in the US District Court for the Eastern
District of New York, charged the defendants with multiple violations of
antifraud, securities, and broker-dealer registration laws. The regulator is seeking a permanent injunction against the individuals and the entities, restitution of ill-gotten gains, and civil
penalties.</p><p>SEC Targets Unregistered Operations</p><p>Recently, the SEC has been pursuing companies for
allegedly failing to register with the agency. Last month, the regulator <a href="https://www.financemagnates.com/cryptocurrency/sec-sues-kraken-for-registration-failure-mixing-customers-funds/" target="_blank" rel="follow">launched a lawsuit against Kraken</a>, a San Francisco-based crypto <a href="https://www.financemagnates.com/terms/e/exchange/">exchange</a>, alleging the
illegal operation of unregistered services encompassing securities exchange,
broker, dealer, and clearing agency activities. </p><p>These charges include allegations of mixing
customers’ funds and crypto assets with that of Kraken, echoing similar
accusations made <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-binance-ceo-over-illegal-exchanges-commingling-of-client-fund/" target="_blank" rel="follow">against Binance and Coinbase</a>. The
SEC accused Kraken of operating as an exchange, broker, dealer, and <a href="https://www.financemagnates.com/terms/c/clearing/">clearing</a>
agency without obtaining the requisite registrations. </p><p>In response, Kraken denied accusations of fraud or
market manipulation, asserting that none of the alleged funds were missing or
misused. However, notably, Kraken did not refute the allegation of
commingling funds but clarified that the SEC did not claim any missing or
misused customer funds. </p>

This article was written by Jared Kirui at www.financemagnates.com.