Court Orders Asset Freeze and Other Preliminary Relief Against Recidivist and Barred Investment Adviser and His Firm

Litigation Release No. 25259 / November 8, 2021

Securities and Exchange Commission v. Swapnil J. Rege and SwapStar Capital, LLC, No. 3:21-CV-19313 (D.N.J. filed October 26, 2021)

The Securities and Exchange Commission announced that on November 8, 2021, it obtained an asset freeze and other preliminary injunctive relief against Swapnil J. Rege and his company SwapStar Capital, LLC. The preliminary injunction and order freezing assets restrains defendants Rege and SwapStar from violating the antifraud provisions of the Investment Advisers Act of 1940, orders that the defendants' assets be frozen (with a limited carve out for certain attorney fees and living expenses as defined in the order), and prohibits the defendants from accepting any additional investor funds. The court's order also freezes assets of Rege's wife, Reema Rege, in her accounts that received proceeds of the alleged fraud. Rege, SwapStar, and Reema Rege assented to this relief.

The SEC's complaint, filed on October 26, 2021 in federal court in New Jersey, alleges that Rege and SwapStar 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, 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.