Nearly a third of the $74 million a New York fund manager raised from more than 800 mostly retail investors never reached an investment at all, according to a civil fraud complaint filed by the Securities and Exchange Commission against him and three companies he controlled. According to the SEC’s civil complaint, sales agents cold-called retirees and other prospective investors with pitches to buy pre-IPO shares in private companies, promising little or no upfront cost. The agency alleges the real price tag was far higher than advertised, and that built-in commissions made the aggressive calling profitable for the people doing it. None of the allegations have been proven in court, and the defendants have not been found liable for any wrongdoing.
Where the $23 Million in Fees Actually Went
The SEC’s complaint names Andrew Spaventa along with The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC, entities it says he owned and controlled. Between December 2020 and June 2025, the complaint alleges, those entities raised the $74 million across eleven separate private funds, all pitched as a way for ordinary investors to buy into pre-IPO shares before a company went public. The investor base was overwhelmingly retail, not institutional, and the SEC says many were retirees.
Of the money raised, the SEC alleges the defendants collected approximately $23 million in upfront fees. More than $12 million of that total was funneled to sales agents as commissions, and about $4 million went to Spaventa personally, according to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York. On a $74 million raise, that puts roughly a third of every dollar an investor contributed into fees and payouts rather than into the pre-IPO shares the funds were supposedly buying.
Free retirement updates: A quiet rule change can shrink your Social Security or Medicare check, and no one warns you. The free Retirement Shield newsletter catches these early and tells you what to do. Get it free.
The 46% Markup Investors Were Never Told About
The SEC’s core allegation is not that pre-IPO investing is inherently improper, but that the fee structure was hidden. Spaventa, through entities he controlled, allegedly bought pre-IPO shares directly or through another investment fund, then resold them to his own funds at marked-up prices. Those markups were passed to investors as fees embedded in the price of membership interests in the funds, not disclosed as separate charges. Investors were told they would pay no upfront fees at all, or at most 12.5%, the SEC says. The complaint alleges the actual prices paid were, on average, about 46% higher than what Spaventa himself paid for the same shares.
Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, said in the agency’s press release announcing the charges that unsolicited calls and high-pressure sales tactics are hallmarks of boiler-room operators, who reel in investors and then hit them with hidden fees. Investor.gov’s glossary describes a boiler room as a large-scale operation built to lure in investors through cold calls and other unsolicited pitches using high-pressure tactics, rather than a registered brokerage relationship, the model the SEC says Spaventa’s agents used.
More Than 100 Sales Agents Working a Cold-Call Script
The SEC says the defendants relied on more than 100 sales agents to cold-call thousands of prospective investors and pitch the funds using high-pressure tactics. The commission structure gave those agents a direct financial stake in closing deals quickly: with more than half of the $23 million in fees flowing straight to commissions, the incentive ran toward volume and urgency rather than a client’s actual financial situation. Retirees are a common target for this kind of outreach because many hold liquidated savings, are reachable by phone during the day, and may be less familiar with how pre-IPO share pricing is supposed to work.
Investor.gov’s alert on checking an investment seller’s background recommends using the SEC’s free search tool to confirm registration or licensing status before sending money, and lists disciplinary actions, customer complaints, and lawsuits as warning signs, checks that, if run against Spaventa’s more than 100 sales agents, could have flagged unregistered activity before any of the $23 million changed hands.
Why Regulators Call Pre-IPO Pitches a Recurring Retiree Trap
The SEC’s own Investor Alert on pre-IPO investment scams, most recently updated in June 2024, describes almost the exact pattern laid out in the Spaventa complaint: sales agents claiming there are no upfront fees when markups are in fact built into the price, boiler rooms built around cold-calling from purchased contact lists, and pitches built around trending sectors to make the opportunity sound urgent. The alert also lists a string of earlier SEC pre-IPO cases going back several years, including one against three New York-based defendants the agency said raised more than $184 million through a similar structure, evidence, in the SEC’s telling, that this fee pattern recurs rather than being an isolated scheme.
The SEC’s complaint charges Spaventa and the three entities with violating the antifraud, securities registration, and broker-dealer registration provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940, and seeks disgorgement, civil penalties, and permanent injunctions. It also charges Spaventa individually with control person liability and aiding and abetting violations, a broader set of claims than the other three defendants face. None of those claims have been decided by a court, and the defendants have not been found liable for any of the conduct described in the filing.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
More Financial Reading
- What really happens to your joint savings account when you die?
- How many CDs can you park at 1 bank? FDIC rules you must know
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
