US charges two former Linqto CEOs over $450 million 'pre-IPO' fraud scheme, one pleads guilty

U.S. prosecutors announced on Wednesday criminal fraud charges against two former chief executive officers ‌of Linqto over their alleged roles in a $450 million scheme to defraud thousands of investors hoping to cash in on private companies before they went public.

William Sarris, 75, who founded Linqto and was CEO of the now-bankrupt Silicon Valley online investment platform for ​14 years, was charged in Manhattan with six counts including securities fraud, wire fraud, broker-dealer fraud and ​conspiracy.

Joseph Endoso, 66, who succeeded Sarris as CEO after serving as president, pleaded guilty ⁠to securities fraud, broker-dealer fraud and conspiracy charges and is cooperating with prosecutors.

Prosecutors said Sarris exploited investors' difficulty ​in valuing companies such as Anthropic, Ripple and the now-public SpaceX that were expected to conduct initial public offerings, or "pre-IPO" ​companies, by manufacturing "false scarcity" and charging markups that drove up prices and the value of his Linqto stake, which he wanted to cash out.

by Reuters

Kawhi Leonard faces SEC scrutiny after Clippers NBA punishment

Kawhi Leonard may think he’s headed for a clean slate in Toronto, but the scandal he is leaving behind in Los Angeles apparently isn’t ready to let him go just yet.

Mere hours before the NBA concluded its nearly yearlong investigation into Leonard and the LA Clippers Wednesday, Daktronics disclosed that the Securities and Exchange Commission is seeking information concerning the South Dakota-based company — which built the $100 million video board inside the Clippers’ Intuit Dome — and its relationship with Leonard.

“As you might expect, we have received requests for information from the NBA,” Daktronics acting CFO Howard Atkins said during an earnings call with investors. “Additionally, the Securities and Exchange Commission is seeking information from us concerning the company and Mr. Leonard.”

Atkins said Daktronics is cooperating with both investigations.

by NY Post

SEC’s Accounting Unit Seen as Core Fraud Enforcement Engine

Public companies and auditors are likely to see more SEC investigations, more enforcement suits, and bigger and more complicated cases now that the agency has created a specialized unit to go after accounting fraud, attorneys say.

Compliance and defense attorneys, meanwhile, intend to reinforce their message to clients that the Securities and Exchange Commission is serious about financial reporting misconduct and will be bringing cases.

“The commission has taken some of the best lawyers, hired more, brought them together and put them in one specialized unit,” said John Carney of Baker & Hostetler LLP. “If you put people in a targeted environment where they’re supposed to go after something, no surprises — they do.”

The initiative, announced in August, dovetails with SEC Chairman Paul Atkins’ approach and priorities, attorneys say.

by Bloomberg Law

The Prediction Markets Crackdown Continues

... Federal authorities are reportedly investigating separate instances of alleged trading on prediction markets using nonpublic information, with potential charges reportedly under consideration. The reported matters involve two distinct categories of information: sensitive government information pertaining to military strikes in Iran and Venezuela allegedly obtained through military service and confidential corporate information allegedly obtained through professional employment. Neither involves the archetypal executive trading the securities of his or her own company. Both illustrate a defining feature of prediction markets: information acquired through a wide range of professional roles and relationships could, if misused, be converted directly into trading profits.

by Freshfields