U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23501 / March 25, 2016
Securities and Exchange Commission v. John V. Bivona, et al., Civil Action No. 3:16-cv-1386 (U.S. District Court for the Northern District of California)
The Securities and Exchange Commission today announced fraud charges and asset freezes obtained in a case filed against a New Jersey-based fund manager and two firms he controls that marketed shares in promising pre-IPO tech companies in the Bay Area. The SEC alleges they stole $5.7 million from investors and diverted millions more to other improper and undisclosed uses.
Specifically, the SEC alleges that John Bivona used money raised through Saddle River Advisors and SRA Management Associates to pay off earlier investors, prop up other funds, and pay family-related expenses. He secretly steered the lion's share of misappropriated funds to his nephew Frank Mazzola, who was barred from the securities industry in a prior SEC enforcement action and is charged along with Bivona and his firms in the complaint filed Monday in federal district court in California.
According to the SEC's complaint:
Investors can learn more about the risks involved with investing in unregistered offerings by reading such SEC investor bulletins as 10 Red Flags That An Unregistered Offering May Be A Scam and Private Placements Under Regulation D.
The SEC charges Bivona, Saddle River Advisors, and SRA Management Associates with violating Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rule 206(4)-8 thereunder, Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC also charges Bivona with aiding and abetting Saddle River Advisors and SRA Management Associates in violating these provisions. The SEC charges Mazzola with violating the terms of his bar order, Section 203(f) of the Advisers Act, and Section 15(b)(6)(B)(i) of the Exchange Act, Bivona with aiding and abetting Mazzola's violations, and Bivona, Saddle River Advisors, and SRA Management with violating Section 203(f) of the Advisers Act. Finally, the SEC charges Bivona, Mazzola, Saddle River Advisors, and SRA Management Associates with violating Section 5(a) and (c) of the Securities Act, and the Saddle River Advisors and SRA Management with violating Section 15(a) of the Exchange Act.
The SEC's complaint seeks permanent injunctions plus disgorgement with prejudgment interest and monetary penalties from Bivona and the firms as well as Mazzola. The SEC obtained a court order to freeze the assets of Frank Mazzola and his wife, a relief defendant, and ordering the appointment of an independent monitor over Saddle River Advisors, SRA Management, the SRA Funds, and other affiliated entities. The order also preliminarily enjoins Bivona, Saddle River Advisors, and SRA Management Associates from violating the antifraud provisions of the federal securities laws and raising money from investors.
The SEC's investigation was conducted by Jessica W. Chan and Ellen Chen of the San Francisco office, and the case was supervised by Jeremy E. Pendrey. The SEC's litigation will be led by John Yun, Marc Katz, and Ms. Chan.
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