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1 SE 3rd Ave # 1200
SunTrust International Center
Miami, Florida 33131

Florida Unregistered Broker Among Those Charges By SEC in Multi-Million Dollar Case

On December 7th, 2023, the Securities and Exchange Commission (SEC) announced federal securities fraud charges against five unregistered brokers, including a South Florida resident. In total, the defendants engaged in $525 million in unregistered securities offerings—thereby netting nearly $90 million in improper profits from undisclosed fees. Within this article, our Florida unregistered broker losses attorney discusses the charges filed against the defendants.

Background: Millions in Funds Raised in Unregistered Pre-Initial Public Offerings (IPOs) 

In the United States District Court of the Eastern District of New York, the SEC filed securities fraud charges against five unregistered brokers. The complaint names four different companies—through which funds were raised from investors during unregistered “pre-IPO” offerings. The charges were filed against Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, and Joseph Rivera. Notably, Mr. Pirrello, Jr. is a resident of Palm Beach County, Florida. The four companies that were cited in the complaint as being part of fraudulent unregistered securities offerings are:

  • Prior 2 IPO Inc.;
  • Late Stage Asset Management, LLC;
  • Pre IPO Marketing Inc.; and
  • JL Rivera Enterprises Ltd.

 Tens of Millions Were Siphoned Off From Unsuspected Investors 

The SEC has filed a detailed complaint against all five of the aforementioned individuals for orchestrating a large-scale securities fraud scheme using unregistered securities offerings. In total, the defendants used four companies to raise more than $528 million from more than 4,000 global investors. They reportedly used a network of unlicensed sales agents.

Contrary to their claims of no upfront fees and profits only post-IPO, the defendants reportedly charged investors substantial undisclosed markups—in some cases up to 150 percent. The SEC contends that more than $88 million  was illicitly obtained by the defendants and their sales agents. Notably, the alleged ringleader of the securities fraud scheme—Raymond J. Pirrello, Jr. of West Palm Beach, FL—has a previous SEC bar due to insider trading. 

Pre-IPO Offerings Can Be Risky Investments 

An Initial Public Offering (IPO) is the process through which a private company offers shares to the public for the first time. Pre-IPO offerings represent investments in companies before they become publicly traded on a stock exchange. While these investments can offer high returns, they inherently carry significant risks. The lack of public trading means less transparency and liquidity compared to publicly traded stocks. Investors may find it challenging to verify information about the company’s financial health and prospects. Beyond that, the valuation of pre-IPO companies is often speculative, there is a risk of overvaluation. Further, regulatory oversight is also less stringent increasing the risk of fraud and mismanagement.

 Contact Our Florida Unregistered Broker Fraud Attorney Today

At ​Carlson & Associates, P.A., our Florida securities fraud lawyers have what it takes to hold negligent brokers accountable. If you have any questions about an unregistered broker claim, we can help. Contact us now for a confidential case review. With a legal office in Miami, we protect the rights and interests of investors throughout South Florida.

Source:

sec.gov/news/press-release/2023-245

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