SEC Charges 5 Brokers and 4 Firms for Pre-IPO Fraud

The Securities and Exchange Commission (SEC) announced charges against five people and four affiliated entities situated in New Jersey and New York today. The allegations come from fraudulent conduct involving pre-initial public offering (IPO) financing.

Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, and Joseph Rivera are among those charged. Prior 2 IPO Inc., Late Stage Asset Management, LLC, Pre IPO Marketing Inc., and JL Rivera Enterprises Ltd. are the firms involved.

According to the SEC's complaint, these defendants used an extensive network of unregistered sales agents throughout the United States to generate roughly $528 million in pre-IPO unregistered offers. These offers were aimed at almost 4,000 investors globally.

The accusation that the defendants deceived investors by suggesting there were no upfront expenses connected with these offers is what makes this case so troubling. Investors were persuaded that profits would be earned only after the pre-IPO firms became public. The case, however, discloses that all investors were charged hidden upfront markups, some as high as 150 percent. The defendants and their network of unregistered sales representatives collected more than $88 million as a consequence.

The SEC also claims that the accused went to significant measures to hide the identities of one of the scheme's ringleaders, Raymond J. Pirrello, Jr. This was done to conceal the fact that Pirrello had previously been forbidden from interacting with broker-dealers in an SEC administrative case. Pirrello was found guilty of insider trading in August 2019.

The SEC has filed a suit in the Eastern District of New York. It accuses the five persons and four businesses of several breaches of federal securities laws, including antifraud, securities, broker-dealer registration, and other requirements. The SEC is suing all of the defendants for permanent injunctions, disgorgement of ill-gotten earnings with pre-judgment interest, and civil penalties. Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, and Joseph Rivera are all facing officer and director bars.

This lawsuit demonstrates the SEC's dedication to safeguarding investors and preserving the integrity of the financial markets. Such fraudulent operations not only affect investors but also weaken trust in the financial system as a whole. The SEC's enforcement actions convey a strong message that individuals who engage in such wrongdoing will face serious consequences.

Please visit the official SEC website for additional information on this matter and to remain up to speed on the SEC's activities.

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About the SEC

The Securities and Exchange Commission (SEC) is the major regulatory organization in the United States that oversees the securities sector, which includes securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC's purpose is to protect investors, keep markets fair and efficient, and promote capital creation. To learn more, go to www.sec.gov.