Andrew Spaventa, known as Drew Spaventa, a New York resident, owned and controlled three entities operating under the TSG Invest umbrella, The Spaventa Group LLC, TSG Capital Advisors LLC, and TSG Alpha Partners LLC, which together operated what the SEC describes as a boiler room selling access to shares of coveted private companies before they went public. Spaventa marketed eleven private funds to retail investors as a way to invest in pre-IPO shares of private companies, the kind of exclusive, high-upside opportunity that ordinary investors rarely reach. Between approximately December 2020 and June 2025, Spaventa and his entities raised more than $74 million from more than 800 mostly retail investors across the United States. The mechanism beneath the pitch was a markup scheme: through entities he owned, Spaventa purchased the pre-IPO shares, either directly or through another investment fund, and then sold them in principal transactions to his own funds at marked-up prices, passing those markups on to investors as hidden fees. On August 14, 2026, the SEC charged Spaventa and the three entities in the U.S. District Court for the Southern District of New York. The pre-IPO share market has produced a string of similar cases, including the fraud by Eric Munson of Adit Ventures and the fabricated Anduril access sold by Giovanni Pennetta of Sestante Capital.
The SEC’s complaint charges the defendants with violating the antifraud, securities registration, and broker-dealer registration provisions of the Securities Act, the Exchange Act, and the Investment Advisers Act, and charges Spaventa with control person liability and aiding and abetting. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and conduct-based injunctions against Spaventa. The investigation was conducted by the SEC’s Asset Management Unit and the New York Regional Office.
Over 100 Sales Agents Cold Calling Retirees With High-Pressure Pitches
The engine of the operation was a classic boiler room. According to the SEC, Spaventa and his entities used over 100 sales agents to cold call and pitch the funds to thousands of prospective investors, many of them retirees, using high-pressure sales tactics. A boiler room operates by volume and pressure: a large roster of salespeople works through lists of phone numbers, delivering scripted pitches designed to overcome resistance and close sales quickly, often targeting older investors who may have retirement savings to deploy and who may be more susceptible to a persuasive telephone pitch. The scale here, more than 100 sales agents contacting thousands of prospective investors, reflects an industrialized approach to investor solicitation. None of this sales force operated within the registration and supervision framework that governs legitimate securities sales, which is the basis for the broker-dealer registration charges in the complaint.
The appeal of the pitch rested on the genuine scarcity and desirability of pre-IPO shares. Investors are drawn to the idea of buying into companies like the well-known names that dominate private markets before those companies go public, on the theory that the largest gains happen before the IPO. That genuine appeal is what boiler rooms selling pre-IPO access exploit: the underlying asset class is real and desirable, which lends credibility to an operation whose actual profit comes not from the investment’s performance but from the hidden fees layered onto the purchase. Spaventa’s funds gave investors real exposure to pre-IPO shares, but at prices inflated far beyond what the shares actually cost the operation to acquire.
Told They Would Pay No Fee or 12.5%, Investors Actually Paid Prices 46% Above Cost
The core misrepresentation was about fees. Spaventa and his entities falsely told investors that they would pay either no upfront fees at all or upfront fees of at most 12.5%. In reality, according to the SEC, the prices investors paid were on average approximately 46% higher than the prices Spaventa paid for the same investments. This gap between the represented fee ceiling and the actual markup is the heart of the fraud. An investor who is told they will pay no more than 12.5% in fees, and who then pays a price 46% above the operation’s cost, is being charged more than three times the disclosed maximum, with the difference concealed inside the price of the shares. Because Spaventa controlled both sides of these principal transactions, buying the shares through his entities and then selling them to his own funds, the markups were entirely within his control and entirely hidden from the investors who bore them.
The money the scheme extracted through these hidden fees is precisely quantified in the complaint. The defendants collected approximately $23 million in upfront fees from unsuspecting investors. Of that, more than $12 million was funneled to the sales agents as commissions, the payments that motivated the boiler room’s 100-plus callers to keep dialing and closing. Approximately $4 million went to Spaventa personally. The structure reveals the economics of the operation: nearly a third of the $74 million raised was consumed by fees the investors were told they would not pay, and the largest share of those fees went to compensating the sales force that brought the investors in. The SEC’s investor alert on pre-IPO offerings warns specifically about undisclosed markups and fees in exactly this kind of arrangement.
Eleven Funds, Principal Transactions, and a Conflict Never Disclosed
The use of eleven separate private funds gave the operation scale and the appearance of a diversified investment platform, while the principal transaction structure at the center of each fund created the conflict of interest that made the hidden markups possible. In a principal transaction, the adviser or its affiliate is on the other side of the trade from the client, selling the client something the adviser owns. This arrangement is heavily regulated under the Investment Advisers Act precisely because it creates an incentive for the adviser to sell at an inflated price, and it generally requires disclosure to and consent from the client. Spaventa, according to the complaint, bought the pre-IPO shares through entities he owned and then sold them to his own funds at marked-up prices, without the disclosure and consent the law requires. The investors in the eleven funds were on the losing side of transactions structured by the person who controlled both sides. The registration provisions Spaventa is charged with violating, both securities registration and broker-dealer registration, reflect that the funds were sold as unregistered securities through an unregistered sales operation.
Conclusion
Andrew Spaventa raised more than $74 million from over 800 mostly retail investors, many of them retirees reached through a boiler room of more than 100 cold-calling sales agents. He told them they would pay no upfront fee or at most 12.5%, and then sold them pre-IPO shares at prices averaging 46% above what he had paid, concealing the difference as hidden fees. The operation collected $23 million in those fees, paid more than $12 million to its sales agents, and delivered about $4 million to Spaventa personally. The pre-IPO shares were real, but the fee promise was false and the markups were hidden inside the price. The SEC charged Spaventa and his three entities in August 2026. The investors were told 12.5%. They paid 46%.
