SEC Charges Recidivist and Barred Investment Adviser and His Firm

Litigation Release No. 25249 / October 27, 2021

Securities and Exchange Commission v. Swapnil J. Rege and SwapStar Capital, LLC, No. 21-CV-19313 (D.N.J. filed October 26, 2021)

The Securities and Exchange Commission yesterday charged a New Jersey-based individual with stealing money from investment advisory clients, and doing so while he was subject to a prior SEC order barring him from being in the investment advisory business.

The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, alleges that Swapnil J. Rege and his company SwapStar Capital, LLC solicited Rege's friends, neighbors, and other referrals to be the defendants' investment advisory clients. Rege and SwapStar allegedly misrepresented to their clients that client money would be invested in securities for guaranteed returns. According to the SEC's complaint, Rege and SwapStar instead used client money to pay fictitious gains to other clients, to return original investment amounts to other clients, and to pay for some of Rege's personal expenses.

The complaint alleges that Rege engaged in the alleged misconduct even after the SEC had barred him, in a 2019 SEC order, from associating with an investment adviser and ordered him to cease and desist from further violations of certain anti-fraud provisions in the Advisers Act. The complaint alleges that Rege acted as an investment adviser in violation of the bar against him. Further, according to the SEC's complaint, Rege failed to disclose to his advisory clients that he had been barred from associating with an investment adviser.

The complaint charges Rege and SwapStar with violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act. It also charges Rege with violating Section 203(f) of the Advisers Act and seeks court enforcement of the 2019 SEC order pursuant to Section 209(d) of the Advisers Act.

The complaint seeks a preliminary injunction, asset freeze, and other emergency and ancillary relief. The complaint also seeks further injunctive relief, disgorgement of ill-gotten monetary gains plus interest, and penalties. The complaint names as a relief defendant Rege's wife, Reema Rege, and alleges that her accounts received proceeds of the alleged fraud.

The SEC's case is being handled by Robert Baker, Naomi Sevilla, and Michael Moran of the SEC's Asset Management Unit, along with Martin Healey and John McCann, all of the Boston Regional Office. The SEC acknowledges and appreciates the assistance of the Commodity Futures Trading Commission (CFTC) and the New Jersey Bureau of Securities. The CFTC also announced today that it filed a related action yesterday in the matter of CFTC v. Swapnil Rege and SwapStar Capital LLC, 21-cv-19337 (D.N.J. Oct. 26, 2021). The SEC's investigation is continuing.