SEC Charges Pre-IPO Investment Adviser and Its Two Principals with Misleading Investors

ADMINISTRATIVE PROCEEDING
File No. 3-20029

September 18, 2020 - The Securities and Exchange Commission today charged New Jersey-based investment adviser Keyport Venture Advisors LLC and its two managing partners, John M. LoPinto and Robert R. Wilkos, with misleading investors while selling them interests in a pooled investment fund focused on pre-IPO companies.

According to the SEC's order, LoPinto and Wilkos founded the Keyport Fund to invest in the shares of pre-IPO companies, and established Keyport Venture Advisors to manage the fund and to identify, secure, and direct pre-IPO investments in the fund. The order finds that starting in October 2019, LoPinto and Wilkos solicited investors for various series of the fund focused on different pre-IPO companies, and in December 2019, they represented to potential investors that the third series of the fund already held shares of its intended investment, a pre-IPO online rental marketplace. In reality, according to the order, LoPinto and Wilkos were having difficulty locating shares of this company, and did not secure an offer for shares until July 2020, several months after investors had invested $198,000 in the new series. As stated in the order, LoPinto and Wilkos nonetheless took all fees associated with the fund, including their management fee, in March 2020 and did not correct their prior misstatements.

The SEC's order finds that Keyport Venture Advisors, LoPinto, and Wilkos violated Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, which prohibit investment advisers from making misrepresentations to investors or potential investors in pooled investment vehicles. Without admitting or denying the allegations, Keyport Venture Advisors, LoPinto, and Wilkos agreed to be censured by the SEC and to cease and desist from future violations. In addition, LoPinto and Wilkos agreed to each pay a penalty of $40,000. Keyport Venture Advisors also voluntarily returned all funds and all related fees to investors in the third series.

The SEC's investigation was conducted by David Zhou. The case was supervised by Jennifer J. Lee and Monique C. Winkler.