The US Securities and Exchange Commission (SEC) has settled fraud charges against Adit Ventures Management, its founder and three partners over alleged misconduct involving pre-IPO investments in companies including SpaceX and Klarna.
The SEC alleged that the investment adviser used false claims and promises to solicit investments into Adit-managed funds and misused client money for the firm’s own benefit, including by taking unsecured loans on favourable terms without disclosing them to clients.
Adit Ventures, without admitting or denying the allegations, agreed to a consent order requiring it to pay disgorgement and a civil penalty, subject to approval by a federal judge. Adit Ventures chief investment officer and founder Eric Munson denied the allegations.
The SEC’s complaint alleged that Munson solicited an investor by falsely claiming that one of the funds owned shares in a private, pre-IPO company. The agency also alleged that the defendants purchased pre-IPO shares before directing client funds to acquire those shares at a higher price, while misrepresenting their actual cost.
“Let me be unequivocal: I have delivered for my investors, and I reject these allegations completely,” Munson said in a statement.
He added that he agreed to settle the matter because continuing to fight the allegations would not benefit him or the investors he had served throughout his career.
The case comes as demand for shares in private markets grows, with investors seeking exposure to prominent companies before they go public. Unlike listed markets, private markets are not subject to the same level of scrutiny, potentially leaving investors with limited clarity over what they actually own.
Some investors had purchased what they believed were SpaceX shares through complex arrangements ahead of the company’s blockbuster IPO this year, with some subsequently left uncertain about the nature of their holdings.
The case also follows other alleged fraud involving pre-IPO investments. Last December, a New York investment manager was indicted for allegedly promising clients exposure to non-public shares of drone maker Anduril Industries despite having no access to the company’s stock.
Earlier, three sales executives were arrested over allegations tied to a separate pre-IPO fraud scheme brought by the US Attorney’s Office for the Eastern District of New York.
Meanwhile, artificial-intelligence company Anthropic said earlier this year that it was aware of investment funds claiming to offer indirect access to its shares. The company warned investors about potentially invalid transfers or investment fraud, saying any sale or transfer of its stock without board approval was void.
Anthropic also said it prohibited offers to invest in its past or future financing rounds through special purpose vehicles.
– Reuters
