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

WASHINGTON, D.C. — In a sweeping enforcement action that lays bare the vulnerabilities of retail investors chasing high-growth private market opportunities, the Securities and Exchange Commission (SEC) has filed fraud charges against New York resident Andrew Spaventa and three corporate entities under his direct control. The enforcement action targets a multi-year, large-scale unregistered securities offering scheme that allegedly bilked more than 800 everyday investors out of millions of dollars through deceptive marketing, high-pressure sales tactics, and exorbitant hidden fees.

According to court filings submitted in the U.S. District Court for the Southern District of New York, Spaventa operated a sophisticated "boiler room" style operation between December 2020 and June 2025. Through his network of companies—The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC—Spaventa allegedly raised more than $74 million. The pitch was simple yet alluring to retail investors locked out of exclusive venture-backed markets: an opportunity to secure coveted shares in high-profile "pre-IPO" (initial public offering) private companies before they went public.

However, beneath the veneer of exclusive access and elite alternative asset management lay a web of alleged deception. The SEC’s complaint outlines how Spaventa and his entities systematically misled investors regarding the true cost of their investments, siphoning off millions in undisclosed markups, excessive commissions, and personal enrichment.

Main Facts of the Case

The core of the SEC’s case rests on allegations of widespread securities fraud, unregistered offerings, and unlawful broker-dealer activities.

Between late 2020 and mid-2025, Spaventa and his corporate vehicles established and managed eleven private funds. These funds were marketed primarily to retail investors—including a significant population of retirees—spread across the United States. The pitch centered on acquiring shares in late-stage, highly sought-after private technology and growth companies prior to their public market debuts.

Rather than buying shares directly on behalf of investors as an agent or operating transparently, Spaventa used entities he owned to purchase the pre-IPO shares himself, either directly or through intermediary investment funds. He then turned around and sold those shares in principal transactions to his own retail funds at heavily inflated, marked-up prices.

Crucially, these markups were not disclosed as operational costs or transparent margins; instead, they were baked into the purchase price of membership interests in the funds, functioning as hidden fees. While investors were explicitly told they would pay either zero upfront fees or, at most, a 12.5% fee, the reality was starkly different. The SEC’s investigation revealed that the prices investors ultimately paid were, on average, approximately 46% higher than the actual prices Spaventa paid to acquire the underlying assets.

This massive pricing discrepancy generated approximately $23 million in hidden upfront fees from unsuspecting retail investors. The illicit proceeds were subsequently distributed across the operation:

• More than $12 million was funneled directly to a network of over 100 sales agents as commissions for cold-calling and closing deals.
• Approximately $4 million went directly to Andrew Spaventa for personal use.

The federal regulatory framework requires strict compliance when offering securities to the public, particularly regarding registration, disclosure of material facts, and the licensing of individuals selling securities. The SEC’s complaint alleges that Spaventa and his firms violated 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. Furthermore, Spaventa faces individual charges for control person liability and aiding and abetting the statutory violations.

Chronology of the Operation

The unfolding of the Spaventa scheme follows a classic trajectory of alternative investment fraud, moving from foundational setup to aggressive expansion, and finally, regulatory intervention.

December 2020: The Launch of the Scheme

The illicit enterprise took root around December 2020. Recognizing the booming retail interest in pre-IPO technology startups—fueled by low interest rates, pandemic-era liquidity, and media hype around private unicorns—Andrew Spaventa established and began operating The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC. Over the next four and a half years, this corporate triad would serve as the vehicle for launching eleven distinct private funds designed to pool retail capital.

2021–2024: The "Boiler Room" Expansion

During this multi-year period, the operation scaled aggressively. Spaventa engaged a massive network of over 100 "sales agents" tasked with executing outbound cold calls to prospective investors across the country. Operating much like traditional boiler rooms, these agents deployed high-pressure sales pitches, preying on the financial ambitions and anxieties of retail investors, many of whom were retirees seeking yield in a volatile economic climate.

Agents pitched the eleven private funds as secure, exclusive gateways to generational wealth via pre-IPO shares. Prospective investors were assured that fees were minimal or nonexistent (capped verbally or in materials at 12.5% max). Meanwhile, behind the scenes, Spaventa was quietly purchasing shares through his proprietary entities, marking them up exponentially, and passing the inflated costs downstream.

June 2025: End of the Fundraising Window

The fundraising phase of the enterprise concluded around June 2025, by which point the defendants had successfully extracted over $74 million from more than 800 retail investors. Throughout this four-and-a-half-year run, the structural discrepancy between Spaventa’s acquisition costs and the investors’ purchase prices continued unabated, generating the $23 million fee pool that sustained the sales network and lined Spaventa’s pockets.

August 14, 2026: SEC Enforcement Action

Following a thorough regulatory investigation, the SEC formally unsealed its civil enforcement complaint against Andrew Spaventa, The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC in the U.S. District Court for the Southern District of New York. The filing marked the official public reckoning for the multi-year operation, initiating legal proceedings aimed at asset recovery and permanent industry bans.

Supporting Data and Financial Breakdown

The scale of the alleged fraud is underscored by the granular financial figures compiled by SEC investigators. The mechanics of the markup scheme transformed routine private investment management into a high-yield extraction machine at the expense of retail portfolios.

• Total Capital Raised: More than $74 million was pulled from public markets into eleven private funds.
• Investor Base: Over 800 retail investors, disproportionately consisting of retirees and everyday individuals lacking institutional investment oversight or pedigree.
• Fund Count: 11 private funds utilized as legal silos for the pooled capital.
• Sales Force: More than 100 sales agents deployed to execute cold-calling campaigns and high-pressure pitches.
• Promised vs. Actual Fees: Investors were told to expect 0% to 12.5% in upfront fees. In practice, investors paid prices averaging 46% higher than Spaventa’s actual acquisition costs.
• Total Illicit Fees Generated: Approximately $23 million extracted via hidden markups.
• Commission Payouts: More than $12 million of the illicit fees went directly toward paying off the network of sales agents.
• Personal Enrichment: Approximately $4 million was directed straight to Andrew Spaventa for personal use.

Official Responses and Regulatory Warnings

Federal regulators have seized upon the Spaventa case to issue a stark warning to the broader investing public regarding the proliferation of unregulated private market scams.

Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, pulled no punches when describing the mechanics of the operation and the psychological tactics employed by the defendants:

"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."

The SEC’s legal filings reflect a comprehensive enforcement posture. The regulatory body is asking the U.S. District Court for the Southern District of New York to impose:

1. Permanent Injunctions: Barring the defendants from future violations of federal securities laws.
2. Disgorgement and Prejudgment Interest: Forcing the defendants to surrender all ill-gotten gains amassed through the scheme, accompanied by mandatory interest.
3. Civil Penalties: Imposing financial fines against all defendants proportionate to the severity of the fraud.
4. Conduct-Based Injunctions: Specifically targeting Andrew Spaventa to restrict him from engaging in similar business practices, promotional activities, or fund management operations in the future.

In tandem with the announcement of the charges, regulatory bodies are actively directing public attention toward educational resources. The SEC has reiterated its standing guidance on the unique risks associated with pre-IPO and private market offerings, pointing investors to official advisory channels such as the SEC Investor Alert on Pre-IPO Offerings.

Broader Market Implications

The charges against Andrew Spaventa and his firms are significant not only for the specific victims involved, but also for what they signal about the evolving landscape of private equity and retail investing.

The Democratization Paradox

In recent years, regulatory shifts and consumer demand have driven a push toward the "democratization" of private markets. Retail investors, traditionally excluded from early-stage venture capital and pre-IPO tech companies, have increasingly sought access to high-growth alternative assets. While this trend has opened legitimate pathways for wealth creation, it has also created a lucrative hunting ground for bad actors. Promoters can easily exploit retail investors’ unfamiliarity with private market valuations, liquidity constraints, and fee disclosures.

The Return of the "Boiler Room"

The mechanics utilized in the Spaventa case demonstrate that traditional boiler room tactics—historically associated with penny stocks, microcap fraud, and boiler-room bucket shops of past decades—have successfully migrated into the modern alternative investment space. By wrapping high-pressure telephone sales pitches in the modern jargon of "venture capital," "unicorns," and "pre-IPO shares," fraudsters can project an air of sophisticated legitimacy that catches unsuspecting retail investors off guard.

Heightened Regulatory Scrutiny on Unregistered Offerings

The SEC’s action underscores an ongoing regulatory crusade against unregistered securities offerings and unregistered broker-dealers operating in the private fund space. As regulatory agencies continue to crack down on opacity in private markets, fund managers who bypass traditional registration requirements while utilizing third-party sales networks without proper licensing can expect aggressive oversight, forensic audits, and severe civil and criminal liabilities.

For the 800-plus investors caught up in the Spaventa funds, the road to recovery will depend on the success of the SEC’s receivership and litigation efforts to claw back the remaining assets, commissions, and personal windfalls. Meanwhile, the case stands as a cautionary tale for retail investors navigating the increasingly blurry boundary between public market safety and private market speculation.