The SEC and FINRA have responded to the increased
popularity in owning private shares of major technology companies
such as Facebook and Twitter by stepping up enforcement of the
pre-IPO market.
The SEC recently charged Frank Mazzola and his two
private investment funds (Felix Investments, LLC and Facie Libre
Management Associates, LLC) with securities fraud. The
funds were established solely to acquire shares in Facebook and other
tech firms with securities fraud. The SEC has alleged that
these firms misled investors and pocketed undisclosed fees and secret
commissions.
While fund managers are required to fully disclose
material conflicts of interest and their compensation, Mazzola and
his firms allegedly failed to do so. Mazzola, Felix, and Facie
Libre also earned commissions above and beyond the 5% commission that
was disclosed in offering materials during the acquisition of
Facebook stock. To make matters worse, Mazzola and his firms
allegedly mislead investors into believing Felix and Facie Libre had
ownership in stock of certain tech companies such as Facebook and
Zynga, and made false statements which inflated the revenue of
Twitter to attract investors. According to the SEC and FINRA,
Mazzola improperly raised over $70 million from investors using such
deceitful tactics.
The SEC complaint against Mazzola, Felix, and Facie
Libre request that they be permanently enjoined from violating the
various securities laws and to disgorge any and all wrongfully
obtained benefits.
It is important for investors to use caution and
diligence when investing in pre-IPO stocks because they typically
lack the type of public disclosures that are required for public
stock. If you have been a victim of broker fraud or negligence
the attorneys at Cosgrove Law, LLC may be able to help you recover
your losses.
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