| Violation | What it means | Key law |
|---|---|---|
| Misrepresentation or omission | False statements or hiding material facts (markups, fees, ownership, risk) | Securities Act §17(a); Exchange Act §10(b) and Rule 10b-5; state law |
| Unregistered offering | Securities sold without registration or a valid exemption | Securities Act §5 |
| Unregistered broker | People paid commissions to sell securities without registration | Exchange Act §15(a); state law |
| Breach of fiduciary duty | Advisers putting their interests ahead of clients' (self-dealing, undisclosed principal trades) | Investment Advisers Act §206 |
A single scheme often involves several. For example, the SEC alleged in the Spaventa case violations of the antifraud, securities registration, and broker-dealer registration provisions, plus Advisers Act violations.
Is pre-IPO shares fraud a crime?
It can be. The SEC brings civil cases; the Department of Justice can bring criminal charges. In June 2024, for example, the U.S. Attorney's Office for the Southern District of New York unsealed an indictment of three StraightPath and Legend sales leaders the same day the SEC sued them.
Fraud vs. a bad investment
Losing money is not fraud. A pre-IPO company that never goes public, or goes public at a lower price, can cause losses without anyone breaking the law. The question is whether you were told the truth about what you were buying, what it cost, and who was selling it.
SEC Pre-IPO Enforcement Tracker (2023–2026)
We track seven SEC pre-IPO enforcement actions filed from December 2023 to October 2026, with case summaries, status and links to SEC releases. See the SEC pre-IPO enforcement tracker, 2023–2026.