SEC Charges Andrew Spaventa in $74 Million Pre-IPO Boiler Room Fraud

Between December 2020 and June 2025, a Long Island financial firm called The Spaventa Group raised more than $74 million from retail investors and retirees by selling high-profile private tech shares—including SpaceX, Anduril, Anthropic, and Perplexity—while concealing massive hidden fees, according to a complaint filed by the Securities and Exchange Commission in the Southern District of New York.

High-Pressure Boiler Room Tactics Target Retail Investors

A sales force of over 100 agents cold-called thousands of prospective buyers using slick, scripted pitches. The SEC claims these agents repeatedly promised there were no hidden costs attached to the investments. More than 800 individuals ultimately bought into the 11 private funds run from Long Island and New Jersey. Out of that investor pool, over 650 put in $100,000 or less, while more than 100 were retirees.

“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,” said Sheldon L. Pollock, associate director of the SEC’s New York regional office, in the regulatory filing.

Investors paid on average 46% more for their positions than Spaventa’s own companies paid to secure them. In some cases, markups ran as high as 91%. Regulators state that buyers had no idea these markups existed. Behind the operation was Andrew Spaventa, a 40-year-old former broker who founded The Spaventa Group in 2020 after years of selling pre-IPO investments.

Unpacking the Multi-Layered Fee Structure

The SEC lawsuit details how Spaventa positioned himself at the center of every transaction. Entities controlled by Spaventa—including TSG and TSG Invest Ventures—bought the private shares first. They then resold those positions to Spaventa’s own funds at significantly higher prices, which were subsequently passed down to retail investors.

For example, Fund 8 held Anthropic shares that were acquired at prices ranging from $32.62 to $41.53 per share, but resold to the fund at $58.50. This generated a 41% to 79% markup that netted $5.8 million in 2024 alone. Similarly, Funds 10 and 11 held Perplexity AI positions bought between $340.72 and $389, then resold at $495. Fund 2 held SpaceX, purchased by Spaventa for $595 and flipped to the fund for $975. Anduril appeared across three distinct funds with markups scaling between 29% and 57%. None of these underlying tech companies are accused of any wrongdoing.

All told, the SEC asserts that the accused entities and Spaventa collected $23 million in undisclosed fees. More than $12 million went toward paying commissions to the sales squad, while Spaventa personally pocketed at least $4 million. According to regulatory disclosures, those funds were used for a home purchase, personal renovations, travel, and luxury car payments.

Inside the Sales Playbook and Regulatory Fallout

Many of the sales agents working for Spaventa were unregistered, and several had previous disciplinary suspensions or bars issued by the Financial Industry Regulatory Authority (Finra). They earned commissions of roughly 10%. However, an internal company handbook approved by Spaventa instructed agents never to use the word “commission,” directing them to say “referral fee” instead.

If prospects asked what the fund originally paid for the shares, sales scripts instructed agents to reply, “I’m not sure, but that’s not information I’m privy to.” Marketing materials also claimed that TSG bought existing shares directly from insiders with zero company dilution. Regulators counter that over 90% of the funds’ holdings were actually stakes in other private pre-IPO funds, adding a second layer of fees and compounding investment risk.

Reached by phone, Spaventa denied the allegations outlined in the SEC complaint and stated an intention to defend himself in court. The SEC charged Spaventa alongside three of his corporate entities—TSG, TSG Capital Advisors, and TSG Alpha Partners—with fraud alongside violations of securities and broker-dealer registration provisions.

The SEC is currently seeking financial disgorgement, civil monetary penalties, and a permanent industry bar against Spaventa. Most investors have not recouped their initial capital from the funds, leaving retail participants and retirees facing losses as the litigation proceeds through the Southern District of New York.