The US Securities and Exchange Commission has charged New York resident Andrew Spaventa and three controlled corporate entities for running an unregistered private fund scheme that defrauded retail investors out of more than $74 million through hidden fees.
Operation of the Pre-IPO Fund Scheme
According to the regulatory complaint, Andrew Spaventa operated alongside three entities under his ownership and control: The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC. Between December 2020 and June 2025, the entities raised over $74 million from more than 800 retail investors across eleven private funds.
The scheme involved buying pre-IPO shares directly or via secondary investment vehicles and subsequently selling those shares to the defendants' own funds in principal transactions. These transactions carried substantial price markups that were passed directly to investors as hidden fees on their fund interests.
Cold-Call Sales Tactics and Misleading Fees
To market the offerings, the operation engaged over 100 sales agents to cold-call thousands of potential investors, targeting retirees using high-pressure pitch techniques.
Investors were told that upfront fees would be capped at a maximum of 12.5 percent or waived entirely. However, the prices charged to investors averaged roughly 46 percent above the cost Spaventa paid to acquire the underlying assets.
In total, the defendants extracted approximately $23 million in upfront fees from investors. From these proceeds, more than $12 million was disbursed as sales commissions to agents, while roughly $4 million was directed to Spaventa personally.
Regulatory Charges and Requested Remedies
The SEC filed its enforcement action in the U.S. District Court for the Southern District of New York. The complaint alleges violations of the antifraud, securities registration, and broker-dealer registration provisions contained within the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940.
Spaventa has additionally been charged with control person liability as well as aiding and abetting the statutory violations. The regulator is requesting permanent injunctions, civil penalties, disgorgement of ill-gotten gains with prejudgment interest, and conduct-based injunctions against Spaventa.
| Metric | Alleged Figure |
|---|---|
| Total capital raised | Over $74 million |
| Affected investors | 800+ retail investors |
| Private funds involved | 11 |
| Sales agents deployed | 100+ |
| Average price markup | Approximately 46% |
| Total upfront fees collected | Approximately $23 million |
| Commissions paid to sales agents | More than $12 million |
| Funds allocated to Andrew Spaventa | Approximately $4 million |
Frequently Asked Questions
What statutes are the defendants accused of violating?
The SEC complaint alleges violations of the antifraud, securities registration, and broker-dealer registration provisions under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940.
How were the hidden fees generated in the pre-IPO scheme?
Pre-IPO shares were acquired by Spaventa-owned entities and resold to their private funds at marked-up prices averaging 46% above acquisition cost, passing hidden charges to investors.
