SEC's $74m pre-IPO case turns on the markup, not the access

The SEC sued Andrew Spaventa and three entities he controls on Friday in the Southern District of New York, alleging that a Long Island operation raised more than $74 million from more than 800 investors for 11 private funds holding shares in SpaceX, Anduril, Anthropic and Perplexity ^[1][2][3]. The complaint's theory is not that retail money reached those names; it is that buyers paid on average 46% more than Spaventa's own companies had paid for the same stock, and in some cases 91% more, without knowing it ^[4].

The mechanics are the whole case. According to the SEC, TSG and a second Spaventa-owned company, TSG Invest Ventures, bought the positions first, then resold them to Spaventa's funds at a higher price, which the funds passed on to investors ^[5]. Because Spaventa owned the seller and controlled the entities managing the buyers, the SEC says he needed written client consent for those transactions and never obtained it ^[6]. The funds had no board that could have consented and no third party checking that the transfers were arm's length ^[7].

The per-name numbers are specific. Fund 8 held Anthropic acquired at $32.62 to $41.53 a share and sold at $58.50, a 41% to 79% markup that raised $5.8 million in 2024 ^[8]. Funds 10 and 11 held Perplexity bought between $340.72 and $389 and sold at $495 ^[9]. Fund 2 held SpaceX bought at $595 and sold at $975, a markup of about 64% ^[10][1]. Anduril appeared across three funds at markups between 29% and 57% ^[11]. None of the four companies is accused of wrongdoing ^[12].

The distribution layer is where the money went. More than 100 sales agents cold-called thousands of prospects, many of the agents unregistered and several previously suspended or barred by FINRA ^[13][14]. They earned roughly 10% commissions, and a handbook Spaventa allegedly approved instructed them never to use that word and to say "referral fee" instead ^[14]. Asked what the fund paid for shares, agents were coached to say, "I'm not sure, but that's not information I'm privy to" ^[15]. The script also had them say, "Unlike other firms, we have no hidden fees. So the price we tell you is the price of the investment" ^[16].

In total the SEC alleges $23 million in undisclosed fees, more than half of it, over $12 million, paid out as sales commissions, with at least $4 million to Spaventa, spent on a home purchase, renovations, travel and luxury car payments ^[17][2]. That fee take is roughly 31% of gross proceeds ^[3]. The buyer base was not institutional: more than 650 of the investors put in $100,000 or less, about 81% of the total, and more than 100 were retirees ^[18][4]. "They get you on the phone and then hit you with the hidden fees," said Sheldon L. Pollock, associate director of the SEC's New York regional office ^[19].

Spaventa, 40, denied the allegations and said he plans to defend himself ^[20]. He founded TSG in 2020 after years as a broker selling pre-IPO investments ^[21].

Watch the backdating allegation: the SEC says some fund equity transfer agreements were backdated after staff opened an inquiry in 2023 ^[22]. Watch also whether other SPV distributors start disclosing acquisition cost alongside offer price, and whether their sales forces are registered ^[14][6]. On this complaint, the exposure is not selling private shares to small accounts. It is selling them at a spread you do not name.