SEC Charges Individual Involved in Offering Fraud
Litigation Release No. 24783 / March 26, 2020
Securities and Exchange Commission v. Adam Matthew Root, No. 3:20-cv-00726 (N.D. Tex., filed March 26, 2020)
The Securities and Exchange Commission today announced that Dallas, Texas resident Adam Matthew Root has agreed to settle charges arising from a fraudulent securities offering spanning nearly a year, but which ultimately raised no investor funds.
The SEC's complaint alleges that Root, a "Founding Partner" of Tricent Capital, LLC and Tricent Capital I, LLC (collectively, "Tricent"), misled potential investors in soliciting them to invest in at least two of Tricent's investment funds. According to the complaint, between at least February 2016 and January 2017, Root made material misstatements and omissions related to several issues, including the amount and nature of investments that had been "committed" by others to the funds, the number of startup companies that Tricent had invested in or deployed capital to, the nature of the returns obtained from the sale of a company, and the "patent pending" status of Tricent's investment model. Ultimately Root was never successful in raising any money for Tricent's investment funds.
The SEC's complaint, which was filed in federal court in Texas, charges Root with violating antifraud provisions Section 17(a)(1) and 17(a)(3) of the Securities Act of 1933. Without admitting or denying the charges, Root agreed to permanent injunctive relief, a 10-year officer-and-director bar, a 10-year conduct-based injunction, and a $10,000 penalty. The settlement is subject to court approval.
The SEC's investigation was led by Kelly V. Silverman, supervised by Assistant Director J. Lee Buck, II, and assisted by Edward B. Gerard, Sarah R. Lamoree, Sabrina Hobbs, Tameka L. Chapman, and Assistant Chief Litigation Counsel Melissa J. Armstrong.