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SEC Charges Boiler Operator Accused of Offering “Pre-IPO” Shares

January 14, 2021 Blog

On December 1, 2020, the U.S. Securities and Exchange Commission (SEC) announced charges against an individual in New York who is accused of running a fraudulent boiler room targeting retail investors. According to the SEC’s press release, the individual, “raised approximately $2.1 million from at least 71 retail investors and misappropriated more than $900,000 of their funds.”

SEC: Boiler Room Operator Defrauded Investors Through “High-Pressure Sales Tactics, Misrepresentations and Misappropriation of Their Funds”

As alleged by the SEC, Mark Alan Lisser operated two boiler rooms for an unregistered investment fund called Knightsbridge Capital Partners. Lisser allegedly hired salespeople to promote “pre-IPO” shares in three “well-known companies,” and then sold shares to customers at up to a 62 percent markup. Lisser is also accused of falsely representing that Knightsbridge Capital Partners only charged fees based on investors’ returns, when in fact it collected commissions in addition to the up-front markups.

In addition, the SEC’s Complaint alleges that Lisser and Knightsbridge Capital Partners:

  • “[D]irected over 20 salespeople . . . to cold-call potential investors and to use high-pressure sales tactics to solicit investments.”
  • Misrepresented the risk of investing by claiming that they had purchased shares directly from the “pre-IPO” companies’ employees, when in fact the shares were purchased with investors’ funds from third parties.
  • Withheld from potential investors the fact that Lisser had previously worked for five broker-dealers that had been de-registered by FINRA for “various rule violations,” and used the name “Mark Allen” in order to prevent investors from looking up Lisser’s background.

How to Spot a Boiler Room Scam (and What To Do if You Fall For One)

While boiler room scams were much more common in decades past, they have been making a comeback in recent years. While today’s boiler room operators are using increasingly sophisticated techniques, there are still several hallmarks of which potential investors should be aware. These include:

  • Cold calls from salespeople
  • High-pressure sales tactics
  • Evasiveness regarding investment specifics
  • Offers for “unique” or “exclusive” investment opportunities
  • Promises of substantial and/or guaranteed returns

If you have fallen for a boiler room scam, what should you do? The most important thing you can do is to consult with an investment fraud attorney promptly. In boiler room cases, it is often necessary to take legal action quickly; and, even if the SEC is pursuing an enforcement action, this does not mean that investors will be able to recover their losses. In order to recover your losses, you will need to hire an attorney to pursue a civil claim on your behalf.

Are you a victim of investment fraud? To learn more, schedule a free consultation at Zamansky LLC today.

Contact a Securities Fraud Attorney at Zamansky LLC

Zamansky LLC is a securities fraud law firm that represents retail investors nationwide. If you have lost money in a fraudulent investment scam, we encourage you to call 212-742-1414 or send us your information online to schedule an appointment with one of our attorneys.