SEC Charges New York Promoter Andrew Spaventa and Entities in $74 Million ‘Boiler Room’ Pre-IPO Fraud

WASHINGTON D.C. — In a sweeping enforcement action that underscores the regulatory vulnerabilities of the booming private secondary market, federal securities regulators have leveled severe fraud charges against a New York-based promoter and three corporate entities.

The Securities and Exchange Commission (SEC) announced today that it has filed a civil enforcement action against Andrew Spaventa and his controlled entities—The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC. According to the complaint, filed in the U.S. District Court for the Southern District of New York, the defendants orchestrated a multi-year, large-scale fraudulent scheme involving unregistered securities offerings.

The operation allegedly targeted everyday retail investors, including a significant population of retirees, promising them exclusive, lucrative access to shares of highly sought-after "pre-IPO" private companies. Instead of delivering transparent, high-growth investment opportunities, the defendants allegedly built an elaborate financial labyrinth designed to bleed unsuspecting investors through exorbitant, undisclosed markups and hidden fees.

Between December 2020 and June 2025, Spaventa and his network of corporate entities allegedly raised more than $74 million from over 800 retail investors across the United States. Rather than adhering to fiduciary standards or regulatory registration requirements, the enterprise operated with the aggressive, high-pressure characteristics of a classic boiler room, utilizing a dedicated army of over 100 sales agents to cold-call prospective clients and push investments into eleven private funds.

Main Facts of the Case

The core of the SEC’s complaint centers on a sophisticated bait-and-switch operation involving private company stock. Private pre-IPO investments—shares in companies that have not yet gone public—have historically been restricted primarily to accredited investors, venture capitalists, and institutional funds due to their high risk, lack of public financial disclosure, and illiquidity. However, in recent years, a growing secondary market has emerged, attempting to slice these shares into smaller denominations to appeal to retail investors looking for the next "unicorn" stock before public market debut.

According to the SEC, Spaventa exploited this trend by establishing eleven private funds through The Spaventa Group, TSG Capital Advisors, and TSG Alpha Partners. Through various entities he owned, Spaventa acquired shares of target pre-IPO companies, either directly or via intermediary investment vehicles.

Instead of passing those shares on to his funds at cost plus a transparent management fee, Spaventa allegedly executed a series of principal transactions. He sold the shares to his own funds at heavily inflated, marked-up prices. These markups were then seamlessly embedded into the purchase price of membership interests sold to retail investors, effectively masking the true cost of acquisition and the massive profit margins captured by Spaventa and his network.

The financial discrepancy uncovered by federal investigators is staggering. While Spaventa and his sales agents routinely represented to investors that they would pay either no upfront fees or a maximum upfront fee of 12.5%, the reality on the balance sheets was entirely different. Regulatory forensic analysis revealed that the prices retail investors paid were, on average, approximately 46% higher than the actual prices Spaventa had paid for the underlying investments.

Through this structural deception, the defendants allegedly collected approximately $23 million in upfront fees from unsuspecting retail investors. The allocation of these ill-gotten gains reveals a sprawling operation designed to incentivize aggressive sales behavior:

• $12 million was funneled directly to sales agents in the form of commissions for closing deals over the phone.
• $4 million went directly into Spaventa’s personal pockets.
• The remainder was consumed by the overhead and operational costs of maintaining the enterprise’s high-pressure sales infrastructure.

The SEC’s complaint charges the defendants with multiple violations of federal securities laws, including the antifraud provisions, securities registration mandates, and broker-dealer registration requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Furthermore, Spaventa faces individual charges for control person liability and aiding and abetting the enterprise’s regulatory violations.

The regulator is seeking severe legal remedies, including permanent injunctions against future violations, the complete disgorgement of all ill-gotten gains with prejudgment interest, substantial civil monetary penalties, and conduct-based injunctions barring Spaventa from participating in certain types of securities offerings and management activities.

Chronology of the Scheme

The unfolding of the Spaventa Group enterprise illustrates how fraudulent private placement operations can scale rapidly in the modern digital and telemarketing era, evading immediate regulatory detection while exploiting retail investor enthusiasm for pre-IPO technology and high-growth startups.

Phase 1: Inception and Infrastructure (Late 2020)

In December 2020, as financial markets experienced a surge in retail trading interest and heightened curiosity surrounding pre-IPO technology unicorns, Andrew Spaventa formalized his operational framework. He established and maintained ownership over three primary operational vehicles: The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC.

During this foundational period, the defendants laid the groundwork for eleven separate private funds. These funds were marketed explicitly as specialized vehicles that supposedly afforded everyday retail investors—individuals who would otherwise lack the capital or institutional access required to invest in pre-IPO giants—a front-row seat to private equity wealth generation.

Phase 2: The Cold-Calling Campaign and Expansion (2021–2023)

To fuel the growth of the eleven funds, Spaventa assembled a massive distribution network consisting of more than 100 individuals designated as "sales agents." Operating much like a traditional boiler room, these agents engaged in extensive cold-calling campaigns across the United States.

Targeting thousands of prospective investors—frequently retirees seeking stable growth or high-yield alternatives for their nest eggs—the sales agents utilized aggressive, high-pressure sales tactics. They manufactured a sense of urgency, convincing investors that allocations in premier pre-IPO companies were strictly limited and vanishing quickly.

Throughout this period, as the capital inflows steadily mounted, the defendants systematically executed their markup scheme. Spaventa purchased pre-IPO shares through his private entities and flipped them to the funds at inflated prices, layering the excessive costs directly into the membership interests purchased by retail clients.

Phase 3: Peak Capital Accumulation and Operations (2023–2025)

By mid-2025, the enterprise had successfully extracted more than $74 million from over 800 retail investors. As capital poured in, the distribution of funds followed a lucrative path for the perpetrators. Of the $23 million collected via hidden upfront fees, more than half ($12 million) was immediately recycled back into the sales machine to pay hefty commissions to the telemarketing agents, ensuring their continued motivation to push the funds. Meanwhile, millions more flowed directly to Spaventa’s personal accounts.

Phase 4: Regulatory Investigation and SEC Enforcement (August 2026)

Following a comprehensive investigation by the SEC’s New York Regional Office, the regulatory net finally closed on the operation. On August 14, 2026, the Commission formally filed its civil enforcement action in the U.S. District Court for the Southern District of New York, bringing the four-and-a-half-year enterprise to a grinding halt and freezing its ongoing solicitation activities.

Supporting Data and Financial Breakdown

To fully grasp the magnitude of the alleged fraud, financial analysts and regulatory investigators have broken down the capital flows, markup percentages, and demographic impacts associated with the Spaventa Group funds.

The following data points highlight the scale of the operation detailed in the SEC’s complaint:

• Total Capital Raised: Over $74 million
• Total Investor Base: More than 800 retail investors (predominantly everyday investors and retirees) across the United States
• Number of Private Funds Operated: 11 private funds
• Active Sales Agents Utilized: More than 100 sales agents engaging in cold-calling and telemarketing
• Average Markup on Underlying Shares: Approximately 46% higher than the actual acquisition cost paid by Spaventa
• Disclosed vs. Actual Fee Discrepancies: Investors were told they would pay 0% to 12.5% in upfront fees; however, the embedded markups drove effective costs dramatically higher.
• Total Upfront Fees Collected: Approximately $23 million from unsuspecting investors
• Commission Payouts to Sales Agents: More than $12 million
• Personal Enrichment: Approximately $4 million funneled directly to Andrew Spaventa

Official Responses and Regulatory Warnings

The enforcement action drew sharp rebukes from senior SEC officials, who emphasized the predatory nature of the scheme and warned the public about the deceptive tactics frequently deployed in the unregulated fringes of the private placement market.

Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, delivered a blunt assessment of the defendants’ operational model, drawing a direct parallel between modern financial fraudsters and historic securities scams:

"Unsolicited calls and high-pressure sales tactics are the calling cards of so-called boiler room operators. They get you on the phone and then hit you with the hidden fees. We encourage investors to be vigilant when it comes to these types of tactics."

Regulators pointed out that retail investors are often blinded by the glamour associated with well-known pre-IPO technology and consumer brands. Fraudsters routinely leverage the brand recognition of private "unicorns"—companies that have achieved massive valuations in private markets before launching an initial public offering—to lower the guard of retail investors who might otherwise exercise caution.

In conjunction with the announcement of the charges, the SEC reiterated its ongoing consumer education efforts. The Commission directed market participants and retail investors to review the official SEC Investor Alert dedicated to the risks of investing in pre-IPO offerings. This resource outlines critical warning signs, including:

• High-pressure sales pitches demanding immediate financial commitments over the telephone or via unsolicited digital outreach.
• Vague or opaque disclosures regarding how underlying shares are acquired and priced.
• Discrepancies between advertised low fees and the actual total cost of ownership.
• The utilization of unregistered intermediaries and independent sales agents operating outside traditional, transparent brokerage environments.

Broader Market Implications

The SEC’s case against Andrew Spaventa, The Spaventa Group, TSG Capital Advisors, and TSG Alpha Partners carries significant implications for the broader private securities landscape, private equity secondary markets, and regulatory compliance protocols.

1. The Vulnerability of Retail Investors in Private Markets

For decades, regulatory frameworks like the Securities Act of 1933 placed stringent restrictions on private offerings to protect Main Street investors from high-risk, illiquid, and opaque financial products. However, the proliferation of online platforms, specialized private funds, and secondary market aggregators has increasingly blurred the lines, allowing retail capital to flow into private equity structures that were once the exclusive domain of institutional investors.

The Spaventa case demonstrates how bad actors can exploit this regulatory evolution, packaging complex pre-IPO shares into retail-friendly denominations while stripping away transparency and charging predatory, hidden markups. Legal experts anticipate that the SEC will increase its scrutiny of secondary market intermediaries and private fund managers who target retail demographics through aggressive telemarketing and digital marketing campaigns.

2. Crackdown on Boiler Room Tactics in the Digital Age

While the term "boiler room" traditionally conjures images of 1990s-era stock-brokerage operations pushing microcap penny stocks from cramped offices, the Spaventa enforcement action proves that high-pressure sales tactics have successfully adapted to modern financial products. By deploying a network of over 100 sales agents to cold-call retirees, the enterprise utilized twentieth-century sales strategies to peddle twenty-first-century private equity assets.

The SEC’s aggressive pursuit of control person liability and aiding-and-abetting charges against Spaventa signals that regulators will hold the masterminds of such networks fully accountable not only for the direct fraud of their entities, but also for the systematic misrepresentations propagated by their downstream sales forces.

3. Compliance and Due Diligence Imperatives for Fund Managers

For legitimate market participants operating in the private fund space, the enforcement action serves as a stark reminder of the legal perils surrounding principal transactions and fee disclosures. Failing to disclose material markups—especially when executing principal trades between affiliated entities and retail funds—constitutes a foundational breach of fiduciary duty and federal antifraud laws.

As the SEC and other regulatory bodies continue to review private market disclosures, fund managers are being urged to audit their pricing models, ensure strict adherence to broker-dealer registration requirements, and eliminate any hidden fee structures that misrepresent the true cost of investment to retail clients.

Investors who believe they may have been affected by the Spaventa Group offerings or who wish to review federal investor protection guidelines are encouraged to visit Investor.gov.