The Securities and Exchange Commission
today charged two managers of private investment funds established solely to
acquire the shares of Facebook and other Silicon Valley firms with
misleading investors and pocketing undisclosed fees and commissions. The SEC
alleges that the fund managers collectively raised more than $70 million
from investors.
Separately, the SEC charged SharesPost, an online service that matches
buyers and sellers of pre-IPO stock, with engaging in securities
transactions without registering as a broker-dealer.
The charges stem from the SEC's yearlong investigation of the fast-growing
business of trading pre-IPO shares on the secondary market.
"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," said Robert Khuzami,
Director of the SEC's Division of Enforcement.
"Fund managers must fully disclose their compensation and material conflicts
of interest. Investors deserve better than the kind of undisclosed
self-dealing present in these cases," said Robert Kaplan, Co-Chief of the
SEC Enforcement Division's Asset Management Unit.
SEC v. Frank Mazzola, Felix Investments LLC, and Facie Libre Management
Associates LLC
The SEC alleges that Mazzola, who lives in Upper Saddle River, N.J., and his
firms created two funds to buy securities of Facebook and other high profile
technology companies. However, Mazzola and his firms engaged in improper
self-dealing - earning secret commissions above the 5 percent disclosed in
offering materials on the funds' acquisition of Facebook stock and on
re-sales of fund interests to new investors. The hidden charges essentially
raised the prices paid by their investors for Facebook stock because it
created a disincentive for Mazzola and his firms to negotiate a lower price
for fund investors. They also sold Facie Libre fund interests despite
knowing the funds lacked ownership of certain Facebook shares.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in