SEC v. Legend Venture Partners LLC, No. 1:23-cv-05326, Southern District of New York (June 28, 2023) — Complaint

ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
Steven G. Rawlings
Lee A. Greenwood
Daniel Loss
Suzanne M. Bettis
Joshua D. Tannen
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004-2616
212-336-5571 (Loss)
[email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,

                                             Plaintiff,

                        -against-

LEGEND VENTURE PARTNERS LLC,

                                             Defendant.

COMPLAINT

23 Civ. 5326

JURY TRIAL DEMANDED

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
Defendant Legend Venture Partners LLC (“Legend”) alleges as follows:
SUMMARY
1. This emergency action relates to Legend’s use of a network of unregistered sales
agents to engage in illegal, unregistered offerings of securities in investment vehicles that purportedly
provided access to shares (“Pre-IPO Shares”) of private companies that Legend told investors were
likely to undertake a public offering in the near future (“Pre-IPO Companies”).  But Legend
procured investor funds by fraud, falsely telling investors that the firm would only make money
when investors made money—after the Pre-IPO Companies went public—and that the investors

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would pay no upfront fees or commissions.  Contrary to these representations, however, investors
were in fact charged exorbitant upfront markups on all investments, allowing Legend’s principals
and unregistered sales agents to pocket millions of dollars before investors made a dime.
2. From approximately February through October 2022, Legend raised more than $35
million from more than 300 investors located across the country, including in this District, and
internationally.  In exchange for their investments, investors received interests in a subdivision
(called a “Series”) of one of five investment funds (“Legend Funds”), which were structured as
limited liability companies.  Legend told investors that each Series invested in Pre-IPO Shares of a
particular Pre-IPO Company.  Legend pitched investments in the Legend Funds as a way for retail
investors to access limited-supply Pre-IPO Shares that were not yet available on a public stock
exchange, and to purchase such shares at a lower price than what Legend claimed was implied by
supposedly then-recent valuations of the Pre-IPO Companies.
3. Legend was an outgrowth of another unregistered broker-dealer that marketed Pre-
IPO Shares, StraightPath Venture Partners LLC (“StraightPath”), which is the subject of a
previously filed enforcement action and is currently under receivership.  See SEC v. StraightPath
Venture Partners, LLC, et al., 22 Civ. 3897 (LAK) (S.D.N.Y. filed May 13, 2022).  Prior to February
2022, Legend principals and many of its sales agents served as sales agents for StraightPath, and
almost 60 percent of Legend’s investors, accounting for almost 70 percent of the total funds Legend
raised from investors, had previously invested in StraightPath pre-IPO funds.
4. In a similar manner to the solicitations conducted for StraightPath, Legend falsely
told investors that it would charge only a 20% fee on profits (if any) earned after the relevant Pre-
IPO Company went public.  In fact, Legend earned handsome upfront profits from markups on the
Pre-IPO Shares that, depending on the Pre-IPO Company at issue, averaged between 46% and
105% above the prices Legend paid.  In total, Legend’s principals paid themselves more than $9

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million and their sales agents received over $3.25 million, despite none of the relevant Pre-IPO
Companies having gone public to date.
5. Legend also made other misrepresentations to investors, such as falsely claiming that
the investments they were pitching would immediately double or triple in value and that Legend
already owned the Pre-IPO Shares it was marketing.
6. While Legend claimed to stop selling interests in the Legend Funds in October 2022,
at least as of May 2023, Legend was still telling investors that it was actively seeking opportunities to
purchase Pre-IPO Shares for clients and, as of March 2023, Legend’s principals were continuing to
buy “lead lists” of prospective investors.  And, until at least June 17, 2023, Legend’s website
remained active and available to the public and advertised investments in specific Pre-IPO
Companies through the Legend Funds.
7. The Commission is seeking emergency relief in this matter because an independent
fiduciary is necessary to take over management of Legend and to protect investors in the Legend
Funds, which currently hold Pre-IPO Shares or interests in Pre-IPO Shares that Legend purchased
for more than $22 million.  Court appointment of a receiver will remove these assets from the
control of Legend’s principals, and permit the receiver to take steps to preserve and marshal
additional investor assets and to propose an equitable distribution plan.
VIOLATIONS
8. By virtue of the foregoing conduct and as alleged further herein, Legend has violated
Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a),
77e(c), and 77q(a)], Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (“Exchange
Act”) [15 U.S.C. §§ 78j(b) and 78o(a)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and
Sections 206(1), 206(2), 206(3), and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”)
[15 U.S.C. §§ 80b-6(1), (2), (3), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].

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9. Unless Legend is restrained and enjoined, it will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
10. The Commission brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)]; Exchange Act Section 21(d)
[15 U.S.C. § 78u(d)]; and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-
9(e)].
11. The Commission seeks a final judgment:  (a) permanently enjoining Legend from
violating the federal securities laws and rules this Complaint alleges it has violated; (b) ordering
Legend to disgorge the ill-gotten gains it received as a result of the violations alleged here and to pay
prejudgment interest thereon pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15
U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]; (c) ordering Legend to pay a civil money penalty
pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15
U.S.C. § 78u(d)(3)], and Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and (d) ordering any
other and further relief the Court may deem just and proper.
12. To maintain the status quo, preserve assets sufficient for Legend to pay disgorgement,
prejudgment interest, and a civil penalty, and to protect investor assets, the Commission further
seeks emergency relief during the pendency of this action including:  (a) temporarily and
preliminarily enjoining Legend from violating the federal securities laws and rules this Complaint
alleges it has violated; (b) appointing a receiver over Legend and the Legend Funds; (c) freezing the
assets of Legend and the Legend Funds until such time as the Court appoints a receiver; (d)
enjoining the filing of new bankruptcy, foreclosure, receivership, or other actions against Legend
and the Legend Funds; (e) requiring Legend to provide a verified accounting; and (f) preventing

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Legend from destroying, altering, or concealing documents or other evidence or from directing
other individuals or entities to do so.
JURISDICTION AND VENUE
13. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a)
[15 U.S.C. § 77v(a)]; Exchange Act Section 27 [15 U.S.C. § 78aa]; and Advisers Act Section 214(a)
[15 U.S.C. § 80b-14(a)].
14. Legend, directly and indirectly, has made use of the means or instrumentalities of
interstate commerce or of the mails in connection with the transactions, acts, practices, and courses
of business alleged herein.
15. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)],
Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14].
From at least February until October 2022, Legend’s primary office was in lower Manhattan.
Additionally, certain acts, practices, transactions, and courses of business alleged in this Complaint
occurred within this District, including calls and emails to prospective investors and sales of interests
in the Legend Funds to at least ten investors located in Manhattan and elsewhere in this District.
DEFENDANT
16. Legend is a Delaware limited liability company, formed on September 1, 2021, with
a principal place of business at relevant times in New York, New York.  Legend serves as the
manager and investment adviser for the Legend Funds.  Legend has never been registered with the
Commission in any capacity.
FACTS
I. BACKGROUND ON LEGEND

17. From approximately 2019 until February 2022, Legend’s principals worked as sales
agents for StraightPath, managing boiler rooms they used to sell interests in private pre-IPO funds

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managed by StraightPath.  Legend’s principals ultimately raised more money for StraightPath and
earned more in commissions (nearly $35 million) than any other group of StraightPath sales agents.
More than 45 callers located in these boiler rooms cold-called prospective investors and used sales
scripts that were nearly identical to those that would later be used to solicit Legend investors.
18. In or around February 2022, at approximately the same time StraightPath ceased
raising money from investors and with the assistance from StraightPath’s principals, Legend
commenced operations.
19. At times, Legend described itself to prospective investors as the new name for or a
new division of StraightPath.  But, ultimately, in a manner similar to StraightPath, Legend sold Series
interests in its own pre-IPO funds (i.e., the Legend Funds), which purported to invest in seven Pre-
IPO Companies over time.
20. Pre-IPO Shares are often held by early stage investors and private company
employees and their family members and are not typically widely available to the investing public,
including because they are not listed on a national securities exchange.  They are attractive to
investors due to the potential for high returns in the event the company does make a public offering
and there is high demand for its shares, allowing the shares to be sold above their pre-IPO price.
21. Investment advisers like Legend purport to make these sought-after investments
accessible to individual members of the investing public, in Legend’s case, at allegedly favorable
prices.
22. Over time, Legend’s principals formed six Legend Funds, although Legend
ultimately only offered and sold to investors the securities of five Legend Funds.
23. As described in offering documents and related materials, these five Legend Funds
acquired Pre-IPO Shares of various Pre-IPO Companies.  Each Series of a Legend Fund was
designed to invest in a single Pre-IPO Company’s shares.

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24. In turn, Legend’s business model was to sell interests in an applicable Series of a
Legend Fund to investors.
25. For example, a Series of “Legend Fund 1” owned Pre-IPO Shares of the Pre-IPO
Company Triller.  Thus, an investor in a Triller Series of Legend Fund 1 would own a proportionate
interest in the Triller Pre-IPO Shares owned by that Series.
26. Even though it was not registered as such with the Commission, Legend acted as the
investment adviser to the Legend Funds, as it was compensated for engaging in the business of
providing advice to the Legend Funds regarding the advisability of investing in securities.
27. From approximately February through October 2022, Legend sold Series interests in
the Legend Funds to at least 321 investors located in 48 states and Bermuda.
28. In total, Legend raised more than $35 million from investors in the Legend Funds.
29. Of that total, Legend raised more than $24 million, or almost 70 percent, from
investors who had invested previously in the StraightPath funds.  These overlapping investors
constituted almost 60 percent of the total number of investors in Legend.
II. LEGEND’S SECURITIES OFFERINGS
30. Legend’s website pitched its offerings as a chance to “buy into . . . exciting emerging
companies, some of the hottest on the market, while they’re still private and shares are only available
to employees and institutions with stock options.”
31. To procure investments, Legend operated at least two boiler rooms (which its
principals had earlier operated to sell StraightPath fund interests) in lower Manhattan in which more
than 45 unregistered sales agents cold-called prospective investors using so-called “lead lists”
purchased from third parties.  Many of these sales agents made hundreds of phone calls per day to
solicit investors.

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32. On sales calls, Legend’s sales agents routinely pitched its offerings as if it were selling
actual Pre-IPO Shares to investors, as opposed to Series interests in the Legend Funds.
33. Legend sales agents also falsely represented on sales calls that Legend already owned
the Pre-IPO Shares it was marketing through the Legend Funds.  This sales pitch was consistent
with Legend’s website, which stated that “[t]he Funds we work with will only offer shares after it has
already secured them . . . .”  In many cases, Legend did not actually acquire interests in the Pre-IPO
Shares until months after it collected investor money.
34. Typically during the sales calls, Legend sales agents would tell investors that the
relevant Pre-IPO Company was likely to go public in the near future and that a supposed existing
valuation of the company was, on a per share basis, several multiples of the price that Legend was
offering the Pre-IPO Shares (or corresponding Series interests) to investors.  Although it had no
basis to do so, Legend sales agents often explained to investors that investments in the Pre-IPO
Shares Legend was offering would imminently double or triple in value.
35. Legend sales agents further conveyed to prospective investors on sales calls that,
unlike other brokers, Legend profited only by taking 20% of an investor’s profits when the Pre-IPO
Companies went public and did not charge any upfront fees or commissions.  This was false
because, as Legend sales agents concealed during the sales calls, the firm profited by charging
investors exorbitant markups on the Pre-IPO Shares.
36. These false representations during the sales calls as to how Legend made money
were consistent with Legend’s website, which falsely stated:  “The Funds we work with DO NOT
charge any upfront fees with this transaction, the only costs involved are charged on the back end of
the membership holdings after there is some sort of liquidity event [a]t which time, there will be a
20% fee charged on any profitable portion of your membership holdings, after your initial principle
[sic] is recouped.”  The website further emphasized:  “No other fees will be assessed.”

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37. Legend’s website made no mention of markups, let alone the exorbitant nature of
the markups Legend charged on every investment in the Legend Funds, which as the firm’s
principals knew or recklessly disregarded, made Legend’s pitch regarding how it made money false
and misleading.
38. Based on Legend’s representations, investors generally understood that they were
paying approximately the same price for Series interests backed by Pre-IPO Shares that Legend paid
to acquire the Pre-IPO Shares.  This understanding was important to investors’ decisions to invest in
the Legend Funds.
39. If investors had known that Legend was in fact acquiring interests in the Pre-IPO
Shares at substantially lower prices, they likely would have looked for other avenues to acquire the
Pre-IPO Shares at prices closer to what Legend actually paid for them.
40. Following sales calls, prospective investors would receive an email from Legend that
included hyperlinks to documents, including a private placement memorandum (“PPM”) for the
applicable Legend Fund and a subscription agreement.  The email showed the equivalent per-share
price at which the Series interests in the relevant Pre-IPO Company were being offered to the
investor and attached the signature page of the subscription agreement, which pre-filled the amount
the investor had agreed to invest based on the per-share price at which Legend purported to be
offering the investment.  Neither the email nor the subscription documents made any mention of
the amount of the markup that Legend charged investors.
41. After accepting an investment, Legend would often send a “Welcome Letter”
confirming that the entire amount of the investor’s contribution “has been applied to an investment
in approximately” a particular number of “underlying” Pre-IPO Shares of the relevant Pre-IPO
Company “at a purchase price” that, when multiplied by the number of shares, equaled the total
investment in the corresponding Legend Fund.

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42. These statements in Welcome Letters were false because, as discussed above, Legend
purchased the underlying Pre-IPO Shares for substantially less than the amount it charged investors
for the corresponding Series interests.
43. Until on or around June 30, 2022, by which time Legend had already raised
approximately $26 million from investors, the PPMs for the Legend Funds stated that Legend
“may” charge investors certain upfront fees—including an expense fee (of up to 1 percent), a due
diligence fee (of up to 5 percent), and a “placement agent fee” of up to 10 percent.
44. However, the point-of-sale representations Legend made to investors on its website,
over the phone, and in Welcome Letters indicated that Legend was communicating to investors that
it was not charging these fees.  Consistent with this approach, Legend removed reference to these
upfront fees from the PPMs for the Legend Funds on or about June 30, 2022.
45. The original PPMs also stated that Legend affiliates “may” charge a “mark-up.”  The
PPMs did not state that Legend charged a large markup on every investment transaction, leaving
investors who were told that Legend would only make money after a Pre-IPO Company went public
to believe that they were purchasing Series interests backed by Pre-IPO Shares at approximately the
same prices paid by Legend.
46. In reality, Legend charged substantial fees on every investment in the form of an
undisclosed markup—that is, the difference between the price Legend paid for the Pre-IPO Shares
and the price at which it sold corresponding Series interests to investors—which averaged almost
60%, or between 46% and 105% per Pre-IPO Company.
47. Legend did not disclose the size of a single such markup to investors.
48. Legend used this markup to pay upfront compensation to its principals totaling at
least $9 million and commissions to its unregistered sales force totaling approximately $3.2 million—
all while none of the Pre-IPO Companies Legend marketed have yet to go public.

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49. As of approximately June 30, 2022, after Legend had already raised around $26
million, Legend revised its PPMs to state that “we are charging a markup” that “will be used to pay
expenses of the Fund and to provide compensation to the individuals who oversee the management
of the Fund.”
50. Nevertheless, even after June 30, 2022, Legend continued to mislead prospective
investors through its website and on sales calls, stating that Legend did not make any upfront fees or
compensation unless and until there were profits on a public offering by the Pre-IPO Companies.
And, even after June 30, 2022, Legend never disclosed the size of its markups.
51. In addition to constituting fraud on the Legend Funds and their investors, Legend’s
representations concerning its markups were not “permissible by law” (as the PPMs stated any
markups would be) because they were principal transactions—knowing sales by Legend as a
principal for its own account to its Legend Fund clients—that, pursuant to Advisers Act Section
206(3), required notice and written consent from the affected clients.
52. Legend sold the Pre-IPO Shares it acquired to the Legend Funds as principal and
charged the Legend Funds a markup on the transaction.  The vast majority of these markups flowed
through Legend to its owners and other personnel, who served as investment advisers to the Legend
Funds through their ownership and/or work for Legend.
53. Legend never made the required disclosure of these principal transactions or
received the required written consent from the Legend Fund investors.
54. Prior to June 30, 2022, no communications to investors disclosed the markups
Legend charged, the size of the markups, or the role of Legend (the adviser) in the transactions, and,
even as of June 30, 2022, when Legend revised its PPMs, it still failed to provide notice and obtain
written consent from its affected clients.

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III. THE OFFERINGS OF SERIES INTERESTS IN THE LEGEND FUNDS
VIOLATED THE SECURITIES OFFERING REGISTRATION PROVISIONS

55. Securities Act Section 5 [15 U.S.C. § 77e] makes it unlawful for any person, directly
or indirectly, to offer or sell securities, unless a registration statement is filed with the Commission
and is in effect as to such offer or sale.
56. None of the Series interests sold by Legend were sold pursuant to a registration
statement filed with the Commission.
57. Legend purported to offer the Series interests on the basis of Rule 506(c) of
Regulation D [17 C.F.R. § 230.506(c)], a Commission regulation that provides a safe-harbor
registration exemption under Securities Act Section 4(a)(2) for qualifying private offerings.
58. In order to qualify for the Rule 506(c) safe-harbor, all purchasers of the securities
sold must be “accredited investors”—that is, for example, individual investors who had a net worth
(with their spouse) of more than $1 million or annual income exceeding $200,000 or joint income
exceeding $300,000.  17 C.F.R. §§ 230.501(a)(5), (a)(6).  In addition, the issuer of the securities must
take reasonable steps to verify that the purchasers of the securities are accredited investors, which
may include reviewing documentation such as tax records and brokerage or bank account
statements.  17 C.F.R. § 230.506(c)(2)(ii).
59. Neither the Legend Funds individually, nor Legend on their behalf, took reasonable
steps with respect to the overwhelming majority of the Series interests sold to investors.
60. The investments in the Legend Funds were solicited by unregistered sales agents.
61. For these investors, Legend did little more than collect signed purchaser
questionnaires—that is, self-certifications—concerning whether the investor qualified as an
accredited investor.
62. Legend almost never verified these claims by collecting any of the types of third-
party documents identified in Rule 506(c)(2)(ii).

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IV. LEGEND’S SALES EFFORTS VIOLATED THE BROKER-DEALER
REGISTRATION PROVISIONS
63. Exchange Act Section 15(a)(1) makes it unlawful for any broker or dealer “to effect
any transaction in, or to induce or attempt to induce the purchase or sale of, any security” unless
such broker or dealer is registered with the Commission.  15 U.S.C. § 78o(a)(1).
64. Legend violated these provisions by hiring, training, and running a vast sales network
to sell the Series interests, to which it paid commissions typically generated by the undisclosed
markups it charged the Legend Funds for Pre-IPO Shares.  Legend’s principals then kept the
remaining pieces of these markups for themselves.
65. Legend sold Series interests through a network of more than 45 sales agents.  Many
of these sales agents had previously acted as sales agents for StraightPath, working out of the same
boiler rooms (at least two of which were located in Manhattan).
66. Many of these sales agents made cold calls to potential investors using lead lists and
sales scripts provided by Legend.
67. The sales agents Legend used were not licensed or associated with registered
brokerage firms.  In fact, some of these sales agents previously had been barred from working as
securities brokers by FINRA, or had otherwise been disciplined by other federal or state authorities.
68. Legend’s principals knew that the sales agents they recruited to sell securities for
Legend were not associated with a registered broker at the time of those sales.
69. Nevertheless, Legend paid these unregistered sales agents upfront commissions—
that is, a percentage of the amounts of money they raised for the Legend Funds.
70. Overall, between approximately February and October 2022, Legend paid a total of
more than $3.25 million in commissions to these unregistered sales agents.

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FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)

71. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 70.
72. Legend, directly or indirectly, in the offer or sale of securities and by the use of the
means or instruments of transportation or communication in interstate commerce or the mails, (i)
knowingly or recklessly has employed one or more devices, schemes or artifices to defraud, (ii)
knowingly, recklessly, or negligently has obtained money or property by means of one or more
untrue statements of a material fact or omissions of a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading, and/or
(iii) knowingly, recklessly, or negligently has engaged in one or more transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon the purchaser.
73. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless
enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder

74. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 70.
75. Legend, directly or indirectly, in connection with the purchase or sale of securities
and by the use of means or instrumentalities of interstate commerce, or the mails, or the facilities of
a national securities exchange, knowingly or recklessly has (i) employed one or more devices,
schemes, or artifices to defraud, (ii) made one or more untrue statements of a material fact or
omitted to state one or more material facts necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading, and/or (iii) engaged in one or

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more acts, practices, or courses of business which operated or would operate as a fraud or deceit
upon other persons.
76. By reason of the foregoing, Legend directly or indirectly, has violated and, unless
enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
Advisers Act Section 206 and Rule 206(4)-8 Thereunder

77. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 70.
78. Legend had an adviser-client relationship with and therefore owed a fiduciary duty to
the Legend Funds.
79. From at least February to October 2022, while acting as an investment adviser,
Legend, by use of the mails or any means or instrumentality of interstate commerce, directly or
indirectly, (i) employed a device, scheme, or artifice to defraud a client or prospective client;
(ii) engaged in transactions, practices, or courses of business that operated as a fraud or deceit upon
a client or prospective client; (iii) acting as principal for their own account, knowingly sold securities
to a client, without disclosing to such client in writing before the completion of such transaction the
capacity in which they were acting and obtaining the consent of the client to such transaction;
and/or (iv) engaged in any act, practice, or course of business which is fraudulent, deceptive, or
manipulative.
80. By reason of the foregoing, Legend directly or indirectly, has violated and, unless
enjoined, will again violate Advisers Act Section 206(1), 206(2), 206(3), and 206(4) [15 U.S.C. § 80b-
6] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].

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FOURTH CLAIM FOR RELIEF
Violations of Securities Act Sections 5(a) and (c)

81. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 70.
82. From at least February until October 2022, Legend, directly or indirectly, and
notwithstanding the fact that there was no applicable exemption: (a) made use of the means or
instruments of transportation or communication in interstate commerce or of the mails to sell,
through the use or medium of a prospectus or otherwise, securities as to which no registration
statement was in effect; (b) for the purpose of delivery after sale, carried or caused to be carried
through the mails or in interstate commerce, by means or instruments of transportation, securities as
to which no registration statement was in effect; and/or (c) made use of means or instruments of
transportation or communication in interstate commerce or of the mails to offer to sell, through the
use or medium of a prospectus or otherwise, securities as to which no registration statement had
been filed.
83. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless
enjoined, will again violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e].
FIFTH CLAIM FOR RELIEF
Violations of Exchange Act Sections 15(a)

84. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 70.
85. Legend, while not registered with the Commission as a broker or dealer or associated
with a registered broker or dealer, made use of the mails or other means or instrumentality of
interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale
of, securities other than exempted securities or commercial paper, bankers’ acceptances, or
commercial bills.

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86. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless
enjoined, will again violate Exchange Act Section 15(a)(1) [15 U.S.C. § 78o].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter:
I.
An Order temporarily and preliminarily, and a Final Judgment permanently, restraining and
enjoining Legend, its agents, servants, employees, and attorneys and all persons in active concert or
participation with any of them from violating, directly or indirectly, Securities Act Sections 5(a), 5(c),
and 17(a) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)], Exchange Act Sections 10(b) and 15(a) [15 U.S.C.
§§ 78j(b) and 78o(a)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and Advisers Act Sections
206(1), 206(2), 206(3), and 206(4) [15 U.S.C. §§ 80b-6(1), (2), (3), and (4)] and Rule 206(4)-8
thereunder [17 C.F.R. § 275.206(4)-8];
II.
An Order temporarily and preliminarily, until such time as a receiver over Legend and the
Legend Funds is appointed, freezing the assets of Legend and the Legend Funds;
III.
An Order temporarily and preliminarily, and a Final Judgment permanently, appointing a
receiver over Legend and the Legend Funds;
IV.
An Order temporarily and preliminarily, through a Final Judgment, enjoining the filing of
any bankruptcy, foreclosure, receivership, or other actions by or against Legend and the Legend
Funds;

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V.
An Order requiring Legend to submit a verified accounting of the assets of Legend and the
Legend Funds and the use of all investor funds raised by Legend and the Legend Funds;
VI.
An Order temporarily, and preliminarily, through a Final Judgment, enjoining Legend and
any person or entity acting at their direction or on their behalf, from destroying, altering, concealing,
or otherwise interfering with the access to relevant documents, books and records;
VII.
A Final Judgment ordering Legend to disgorge the ill-gotten gains they received as a result of
the violations alleged here and to pay prejudgment interest thereon pursuant to Exchange Act
Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];
VIII.
A Final Judgment ordering Legend to pay civil money penalties pursuant to Securities Act
Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and
Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and

19
IX.
A Final Judgment granting any other and further relief this Court may deem just and proper.

Dated:  June 22, 2023
 New York, New York

/s/            Antonia            M.            Apps
ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
Steven G. Rawlings
Lee A. Greenwood
Daniel Loss
Suzanne M. Bettis
Joshua D. Tannen
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004
212-336-5571 (Loss)
[email protected]

ANTONIA M. APPS 
REGIONAL DIRECTOR 
Sheldon L. Pollock 
Steven G. Rawlings 
Lee A. Greenwood 
Daniel Loss 
Suzanne M. Bettis 
Joshua D. Tannen 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street, Suite 20-100 
New York, New York 10004-2616 
212-336-5571 (Loss) 
[email protected]  
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
SECURITIES AND EXCHANGE COMMISSION, 
 
                                             Plaintiff, 
 
                        -against- 
 

LEGEND VENTURE PARTNERS LLC,    
  
                                             Defendant. 
 

 
 
COMPLAINT 

   
23 Civ. 5326  

 
   

JURY TRIAL DEMANDED 
  

           
          

 
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

Defendant Legend Venture Partners LLC (“Legend”) alleges as follows: 

SUMMARY 

1. This emergency action relates to Legend’s use of a network of unregistered sales 

agents to engage in illegal, unregistered offerings of securities in investment vehicles that purportedly 

provided access to shares (“Pre-IPO Shares”) of private companies that Legend told investors were 

likely to undertake a public offering in the near future (“Pre-IPO Companies”).  But Legend 

procured investor funds by fraud, falsely telling investors that the firm would only make money 

when investors made money—after the Pre-IPO Companies went public—and that the investors 

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would pay no upfront fees or commissions.  Contrary to these representations, however, investors 

were in fact charged exorbitant upfront markups on all investments, allowing Legend’s principals 

and unregistered sales agents to pocket millions of dollars before investors made a dime.  

2. From approximately February through October 2022, Legend raised more than $35 

million from more than 300 investors located across the country, including in this District, and 

internationally.  In exchange for their investments, investors received interests in a subdivision 

(called a “Series”) of one of five investment funds (“Legend Funds”), which were structured as 

limited liability companies.  Legend told investors that each Series invested in Pre-IPO Shares of a 

particular Pre-IPO Company.  Legend pitched investments in the Legend Funds as a way for retail 

investors to access limited-supply Pre-IPO Shares that were not yet available on a public stock 

exchange, and to purchase such shares at a lower price than what Legend claimed was implied by 

supposedly then-recent valuations of the Pre-IPO Companies. 

3. Legend was an outgrowth of another unregistered broker-dealer that marketed Pre-

IPO Shares, StraightPath Venture Partners LLC (“StraightPath”), which is the subject of a 

previously filed enforcement action and is currently under receivership.  See SEC v. StraightPath 

Venture Partners, LLC, et al., 22 Civ. 3897 (LAK) (S.D.N.Y. filed May 13, 2022).  Prior to February 

2022, Legend principals and many of its sales agents served as sales agents for StraightPath, and 

almost 60 percent of Legend’s investors, accounting for almost 70 percent of the total funds Legend 

raised from investors, had previously invested in StraightPath pre-IPO funds.  

4. In a similar manner to the solicitations conducted for StraightPath, Legend falsely 

told investors that it would charge only a 20% fee on profits (if any) earned after the relevant Pre-

IPO Company went public.  In fact, Legend earned handsome upfront profits from markups on the 

Pre-IPO Shares that, depending on the Pre-IPO Company at issue, averaged between 46% and 

105% above the prices Legend paid.  In total, Legend’s principals paid themselves more than $9 

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million and their sales agents received over $3.25 million, despite none of the relevant Pre-IPO 

Companies having gone public to date.      

5. Legend also made other misrepresentations to investors, such as falsely claiming that 

the investments they were pitching would immediately double or triple in value and that Legend 

already owned the Pre-IPO Shares it was marketing. 

6. While Legend claimed to stop selling interests in the Legend Funds in October 2022, 

at least as of May 2023, Legend was still telling investors that it was actively seeking opportunities to 

purchase Pre-IPO Shares for clients and, as of March 2023, Legend’s principals were continuing to 

buy “lead lists” of prospective investors.  And, until at least June 17, 2023, Legend’s website 

remained active and available to the public and advertised investments in specific Pre-IPO 

Companies through the Legend Funds. 

7. The Commission is seeking emergency relief in this matter because an independent 

fiduciary is necessary to take over management of Legend and to protect investors in the Legend 

Funds, which currently hold Pre-IPO Shares or interests in Pre-IPO Shares that Legend purchased 

for more than $22 million.  Court appointment of a receiver will remove these assets from the 

control of Legend’s principals, and permit the receiver to take steps to preserve and marshal 

additional investor assets and to propose an equitable distribution plan. 

VIOLATIONS 

8. By virtue of the foregoing conduct and as alleged further herein, Legend has violated 

Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a), 

77e(c), and 77q(a)], Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (“Exchange 

Act”) [15 U.S.C. §§ 78j(b) and 78o(a)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and 

Sections 206(1), 206(2), 206(3), and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) 

[15 U.S.C. §§ 80b-6(1), (2), (3), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

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9. Unless Legend is restrained and enjoined, it will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, 

and courses of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

10. The Commission brings this action pursuant to the authority conferred upon it by 

Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)]; Exchange Act Section 21(d) 

[15 U.S.C. § 78u(d)]; and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-

9(e)].  

11. The Commission seeks a final judgment:  (a) permanently enjoining Legend from 

violating the federal securities laws and rules this Complaint alleges it has violated; (b) ordering 

Legend to disgorge the ill-gotten gains it received as a result of the violations alleged here and to pay 

prejudgment interest thereon pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 

U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]; (c) ordering Legend to pay a civil money penalty 

pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 

U.S.C. § 78u(d)(3)], and Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and (d) ordering any 

other and further relief the Court may deem just and proper. 

12. To maintain the status quo, preserve assets sufficient for Legend to pay disgorgement, 

prejudgment interest, and a civil penalty, and to protect investor assets, the Commission further 

seeks emergency relief during the pendency of this action including:  (a) temporarily and 

preliminarily enjoining Legend from violating the federal securities laws and rules this Complaint 

alleges it has violated; (b) appointing a receiver over Legend and the Legend Funds; (c) freezing the 

assets of Legend and the Legend Funds until such time as the Court appoints a receiver; (d) 

enjoining the filing of new bankruptcy, foreclosure, receivership, or other actions against Legend 

and the Legend Funds; (e) requiring Legend to provide a verified accounting; and (f) preventing 

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Legend from destroying, altering, or concealing documents or other evidence or from directing 

other individuals or entities to do so. 

JURISDICTION AND VENUE 

13. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a) 

[15 U.S.C. § 77v(a)]; Exchange Act Section 27 [15 U.S.C. § 78aa]; and Advisers Act Section 214(a) 

[15 U.S.C. § 80b-14(a)].  

14. Legend, directly and indirectly, has made use of the means or instrumentalities of 

interstate commerce or of the mails in connection with the transactions, acts, practices, and courses 

of business alleged herein. 

15. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)], 

Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14].  

From at least February until October 2022, Legend’s primary office was in lower Manhattan.  

Additionally, certain acts, practices, transactions, and courses of business alleged in this Complaint 

occurred within this District, including calls and emails to prospective investors and sales of interests 

in the Legend Funds to at least ten investors located in Manhattan and elsewhere in this District. 

DEFENDANT 

16. Legend is a Delaware limited liability company, formed on September 1, 2021, with 

a principal place of business at relevant times in New York, New York.  Legend serves as the 

manager and investment adviser for the Legend Funds.  Legend has never been registered with the 

Commission in any capacity.   

FACTS 

I. BACKGROUND ON LEGEND 
 

17. From approximately 2019 until February 2022, Legend’s principals worked as sales 

agents for StraightPath, managing boiler rooms they used to sell interests in private pre-IPO funds 

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managed by StraightPath.  Legend’s principals ultimately raised more money for StraightPath and 

earned more in commissions (nearly $35 million) than any other group of StraightPath sales agents.  

More than 45 callers located in these boiler rooms cold-called prospective investors and used sales 

scripts that were nearly identical to those that would later be used to solicit Legend investors.   

18. In or around February 2022, at approximately the same time StraightPath ceased 

raising money from investors and with the assistance from StraightPath’s principals, Legend 

commenced operations. 

19. At times, Legend described itself to prospective investors as the new name for or a 

new division of StraightPath.  But, ultimately, in a manner similar to StraightPath, Legend sold Series 

interests in its own pre-IPO funds (i.e., the Legend Funds), which purported to invest in seven Pre-

IPO Companies over time.   

20. Pre-IPO Shares are often held by early stage investors and private company 

employees and their family members and are not typically widely available to the investing public, 

including because they are not listed on a national securities exchange.  They are attractive to 

investors due to the potential for high returns in the event the company does make a public offering 

and there is high demand for its shares, allowing the shares to be sold above their pre-IPO price.   

21. Investment advisers like Legend purport to make these sought-after investments 

accessible to individual members of the investing public, in Legend’s case, at allegedly favorable 

prices.  

22. Over time, Legend’s principals formed six Legend Funds, although Legend 

ultimately only offered and sold to investors the securities of five Legend Funds. 

23. As described in offering documents and related materials, these five Legend Funds 

acquired Pre-IPO Shares of various Pre-IPO Companies.  Each Series of a Legend Fund was 

designed to invest in a single Pre-IPO Company’s shares. 

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24. In turn, Legend’s business model was to sell interests in an applicable Series of a 

Legend Fund to investors.  

25. For example, a Series of “Legend Fund 1” owned Pre-IPO Shares of the Pre-IPO 

Company Triller.  Thus, an investor in a Triller Series of Legend Fund 1 would own a proportionate 

interest in the Triller Pre-IPO Shares owned by that Series. 

26. Even though it was not registered as such with the Commission, Legend acted as the 

investment adviser to the Legend Funds, as it was compensated for engaging in the business of 

providing advice to the Legend Funds regarding the advisability of investing in securities.     

27. From approximately February through October 2022, Legend sold Series interests in 

the Legend Funds to at least 321 investors located in 48 states and Bermuda. 

28. In total, Legend raised more than $35 million from investors in the Legend Funds. 

29. Of that total, Legend raised more than $24 million, or almost 70 percent, from 

investors who had invested previously in the StraightPath funds.  These overlapping investors 

constituted almost 60 percent of the total number of investors in Legend.  

II. LEGEND’S SECURITIES OFFERINGS 

30. Legend’s website pitched its offerings as a chance to “buy into . . . exciting emerging 

companies, some of the hottest on the market, while they’re still private and shares are only available 

to employees and institutions with stock options.”   

31. To procure investments, Legend operated at least two boiler rooms (which its 

principals had earlier operated to sell StraightPath fund interests) in lower Manhattan in which more 

than 45 unregistered sales agents cold-called prospective investors using so-called “lead lists” 

purchased from third parties.  Many of these sales agents made hundreds of phone calls per day to 

solicit investors.   

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32. On sales calls, Legend’s sales agents routinely pitched its offerings as if it were selling 

actual Pre-IPO Shares to investors, as opposed to Series interests in the Legend Funds. 

33. Legend sales agents also falsely represented on sales calls that Legend already owned 

the Pre-IPO Shares it was marketing through the Legend Funds.  This sales pitch was consistent 

with Legend’s website, which stated that “[t]he Funds we work with will only offer shares after it has 

already secured them . . . .”  In many cases, Legend did not actually acquire interests in the Pre-IPO 

Shares until months after it collected investor money.   

34. Typically during the sales calls, Legend sales agents would tell investors that the 

relevant Pre-IPO Company was likely to go public in the near future and that a supposed existing 

valuation of the company was, on a per share basis, several multiples of the price that Legend was 

offering the Pre-IPO Shares (or corresponding Series interests) to investors.  Although it had no 

basis to do so, Legend sales agents often explained to investors that investments in the Pre-IPO 

Shares Legend was offering would imminently double or triple in value. 

35. Legend sales agents further conveyed to prospective investors on sales calls that, 

unlike other brokers, Legend profited only by taking 20% of an investor’s profits when the Pre-IPO 

Companies went public and did not charge any upfront fees or commissions.  This was false 

because, as Legend sales agents concealed during the sales calls, the firm profited by charging 

investors exorbitant markups on the Pre-IPO Shares. 

36. These false representations during the sales calls as to how Legend made money 

were consistent with Legend’s website, which falsely stated:  “The Funds we work with DO NOT 

charge any upfront fees with this transaction, the only costs involved are charged on the back end of 

the membership holdings after there is some sort of liquidity event [a]t which time, there will be a 

20% fee charged on any profitable portion of your membership holdings, after your initial principle 

[sic] is recouped.”  The website further emphasized:  “No other fees will be assessed.” 

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37. Legend’s website made no mention of markups, let alone the exorbitant nature of 

the markups Legend charged on every investment in the Legend Funds, which as the firm’s 

principals knew or recklessly disregarded, made Legend’s pitch regarding how it made money false 

and misleading. 

38. Based on Legend’s representations, investors generally understood that they were 

paying approximately the same price for Series interests backed by Pre-IPO Shares that Legend paid 

to acquire the Pre-IPO Shares.  This understanding was important to investors’ decisions to invest in 

the Legend Funds. 

39. If investors had known that Legend was in fact acquiring interests in the Pre-IPO 

Shares at substantially lower prices, they likely would have looked for other avenues to acquire the 

Pre-IPO Shares at prices closer to what Legend actually paid for them. 

40. Following sales calls, prospective investors would receive an email from Legend that 

included hyperlinks to documents, including a private placement memorandum (“PPM”) for the 

applicable Legend Fund and a subscription agreement.  The email showed the equivalent per-share 

price at which the Series interests in the relevant Pre-IPO Company were being offered to the 

investor and attached the signature page of the subscription agreement, which pre-filled the amount 

the investor had agreed to invest based on the per-share price at which Legend purported to be 

offering the investment.  Neither the email nor the subscription documents made any mention of 

the amount of the markup that Legend charged investors. 

41. After accepting an investment, Legend would often send a “Welcome Letter” 

confirming that the entire amount of the investor’s contribution “has been applied to an investment 

in approximately” a particular number of “underlying” Pre-IPO Shares of the relevant Pre-IPO 

Company “at a purchase price” that, when multiplied by the number of shares, equaled the total 

investment in the corresponding Legend Fund. 

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42. These statements in Welcome Letters were false because, as discussed above, Legend 

purchased the underlying Pre-IPO Shares for substantially less than the amount it charged investors 

for the corresponding Series interests. 

43. Until on or around June 30, 2022, by which time Legend had already raised 

approximately $26 million from investors, the PPMs for the Legend Funds stated that Legend 

“may” charge investors certain upfront fees—including an expense fee (of up to 1 percent), a due 

diligence fee (of up to 5 percent), and a “placement agent fee” of up to 10 percent.   

44. However, the point-of-sale representations Legend made to investors on its website, 

over the phone, and in Welcome Letters indicated that Legend was communicating to investors that 

it was not charging these fees.  Consistent with this approach, Legend removed reference to these 

upfront fees from the PPMs for the Legend Funds on or about June 30, 2022.    

45. The original PPMs also stated that Legend affiliates “may” charge a “mark-up.”  The 

PPMs did not state that Legend charged a large markup on every investment transaction, leaving 

investors who were told that Legend would only make money after a Pre-IPO Company went public 

to believe that they were purchasing Series interests backed by Pre-IPO Shares at approximately the 

same prices paid by Legend. 

46. In reality, Legend charged substantial fees on every investment in the form of an 

undisclosed markup—that is, the difference between the price Legend paid for the Pre-IPO Shares 

and the price at which it sold corresponding Series interests to investors—which averaged almost 

60%, or between 46% and 105% per Pre-IPO Company. 

47. Legend did not disclose the size of a single such markup to investors. 

48. Legend used this markup to pay upfront compensation to its principals totaling at 

least $9 million and commissions to its unregistered sales force totaling approximately $3.2 million—

all while none of the Pre-IPO Companies Legend marketed have yet to go public. 

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49. As of approximately June 30, 2022, after Legend had already raised around $26 

million, Legend revised its PPMs to state that “we are charging a markup” that “will be used to pay 

expenses of the Fund and to provide compensation to the individuals who oversee the management 

of the Fund.” 

50. Nevertheless, even after June 30, 2022, Legend continued to mislead prospective 

investors through its website and on sales calls, stating that Legend did not make any upfront fees or 

compensation unless and until there were profits on a public offering by the Pre-IPO Companies.  

And, even after June 30, 2022, Legend never disclosed the size of its markups. 

51. In addition to constituting fraud on the Legend Funds and their investors, Legend’s 

representations concerning its markups were not “permissible by law” (as the PPMs stated any 

markups would be) because they were principal transactions—knowing sales by Legend as a 

principal for its own account to its Legend Fund clients—that, pursuant to Advisers Act Section 

206(3), required notice and written consent from the affected clients. 

52. Legend sold the Pre-IPO Shares it acquired to the Legend Funds as principal and 

charged the Legend Funds a markup on the transaction.  The vast majority of these markups flowed 

through Legend to its owners and other personnel, who served as investment advisers to the Legend 

Funds through their ownership and/or work for Legend. 

53. Legend never made the required disclosure of these principal transactions or 

received the required written consent from the Legend Fund investors. 

54. Prior to June 30, 2022, no communications to investors disclosed the markups 

Legend charged, the size of the markups, or the role of Legend (the adviser) in the transactions, and, 

even as of June 30, 2022, when Legend revised its PPMs, it still failed to provide notice and obtain 

written consent from its affected clients. 

 

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III. THE OFFERINGS OF SERIES INTERESTS IN THE LEGEND FUNDS 
VIOLATED THE SECURITIES OFFERING REGISTRATION PROVISIONS 

 
55. Securities Act Section 5 [15 U.S.C. § 77e] makes it unlawful for any person, directly 

or indirectly, to offer or sell securities, unless a registration statement is filed with the Commission 

and is in effect as to such offer or sale. 

56. None of the Series interests sold by Legend were sold pursuant to a registration 

statement filed with the Commission. 

57. Legend purported to offer the Series interests on the basis of Rule 506(c) of 

Regulation D [17 C.F.R. § 230.506(c)], a Commission regulation that provides a safe-harbor 

registration exemption under Securities Act Section 4(a)(2) for qualifying private offerings. 

58. In order to qualify for the Rule 506(c) safe-harbor, all purchasers of the securities 

sold must be “accredited investors”—that is, for example, individual investors who had a net worth 

(with their spouse) of more than $1 million or annual income exceeding $200,000 or joint income 

exceeding $300,000.  17 C.F.R. §§ 230.501(a)(5), (a)(6).  In addition, the issuer of the securities must 

take reasonable steps to verify that the purchasers of the securities are accredited investors, which 

may include reviewing documentation such as tax records and brokerage or bank account 

statements.  17 C.F.R. § 230.506(c)(2)(ii). 

59. Neither the Legend Funds individually, nor Legend on their behalf, took reasonable 

steps with respect to the overwhelming majority of the Series interests sold to investors. 

60. The investments in the Legend Funds were solicited by unregistered sales agents. 

61. For these investors, Legend did little more than collect signed purchaser 

questionnaires—that is, self-certifications—concerning whether the investor qualified as an 

accredited investor. 

62. Legend almost never verified these claims by collecting any of the types of third-

party documents identified in Rule 506(c)(2)(ii). 

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IV. LEGEND’S SALES EFFORTS VIOLATED THE BROKER-DEALER 
REGISTRATION PROVISIONS 

63. Exchange Act Section 15(a)(1) makes it unlawful for any broker or dealer “to effect 

any transaction in, or to induce or attempt to induce the purchase or sale of, any security” unless 

such broker or dealer is registered with the Commission.  15 U.S.C. § 78o(a)(1). 

64. Legend violated these provisions by hiring, training, and running a vast sales network 

to sell the Series interests, to which it paid commissions typically generated by the undisclosed 

markups it charged the Legend Funds for Pre-IPO Shares.  Legend’s principals then kept the 

remaining pieces of these markups for themselves. 

65. Legend sold Series interests through a network of more than 45 sales agents.  Many 

of these sales agents had previously acted as sales agents for StraightPath, working out of the same 

boiler rooms (at least two of which were located in Manhattan). 

66. Many of these sales agents made cold calls to potential investors using lead lists and 

sales scripts provided by Legend. 

67. The sales agents Legend used were not licensed or associated with registered 

brokerage firms.  In fact, some of these sales agents previously had been barred from working as 

securities brokers by FINRA, or had otherwise been disciplined by other federal or state authorities. 

68. Legend’s principals knew that the sales agents they recruited to sell securities for 

Legend were not associated with a registered broker at the time of those sales. 

69. Nevertheless, Legend paid these unregistered sales agents upfront commissions—

that is, a percentage of the amounts of money they raised for the Legend Funds. 

70. Overall, between approximately February and October 2022, Legend paid a total of 

more than $3.25 million in commissions to these unregistered sales agents. 

 

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FIRST CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a) 

 
71. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 70. 

72. Legend, directly or indirectly, in the offer or sale of securities and by the use of the 

means or instruments of transportation or communication in interstate commerce or the mails, (i) 

knowingly or recklessly has employed one or more devices, schemes or artifices to defraud, (ii) 

knowingly, recklessly, or negligently has obtained money or property by means of one or more 

untrue statements of a material fact or omissions of a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading, and/or 

(iii) knowingly, recklessly, or negligently has engaged in one or more transactions, practices, or 

courses of business which operated or would operate as a fraud or deceit upon the purchaser. 

73. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless 

enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

 
74. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 70. 

75. Legend, directly or indirectly, in connection with the purchase or sale of securities 

and by the use of means or instrumentalities of interstate commerce, or the mails, or the facilities of 

a national securities exchange, knowingly or recklessly has (i) employed one or more devices, 

schemes, or artifices to defraud, (ii) made one or more untrue statements of a material fact or 

omitted to state one or more material facts necessary in order to make the statements made, in light 

of the circumstances under which they were made, not misleading, and/or (iii) engaged in one or 

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more acts, practices, or courses of business which operated or would operate as a fraud or deceit 

upon other persons. 

76. By reason of the foregoing, Legend directly or indirectly, has violated and, unless 

enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

THIRD CLAIM FOR RELIEF 
Advisers Act Section 206 and Rule 206(4)-8 Thereunder 

 
77. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 70. 

78. Legend had an adviser-client relationship with and therefore owed a fiduciary duty to 

the Legend Funds. 

79. From at least February to October 2022, while acting as an investment adviser, 

Legend, by use of the mails or any means or instrumentality of interstate commerce, directly or 

indirectly, (i) employed a device, scheme, or artifice to defraud a client or prospective client; 

(ii) engaged in transactions, practices, or courses of business that operated as a fraud or deceit upon 

a client or prospective client; (iii) acting as principal for their own account, knowingly sold securities 

to a client, without disclosing to such client in writing before the completion of such transaction the 

capacity in which they were acting and obtaining the consent of the client to such transaction; 

and/or (iv) engaged in any act, practice, or course of business which is fraudulent, deceptive, or 

manipulative. 

80. By reason of the foregoing, Legend directly or indirectly, has violated and, unless 

enjoined, will again violate Advisers Act Section 206(1), 206(2), 206(3), and 206(4) [15 U.S.C. § 80b-

6] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

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FOURTH CLAIM FOR RELIEF 
Violations of Securities Act Sections 5(a) and (c) 

 
81. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 70. 

82. From at least February until October 2022, Legend, directly or indirectly, and 

notwithstanding the fact that there was no applicable exemption: (a) made use of the means or 

instruments of transportation or communication in interstate commerce or of the mails to sell, 

through the use or medium of a prospectus or otherwise, securities as to which no registration 

statement was in effect; (b) for the purpose of delivery after sale, carried or caused to be carried 

through the mails or in interstate commerce, by means or instruments of transportation, securities as 

to which no registration statement was in effect; and/or (c) made use of means or instruments of 

transportation or communication in interstate commerce or of the mails to offer to sell, through the 

use or medium of a prospectus or otherwise, securities as to which no registration statement had 

been filed. 

83. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless 

enjoined, will again violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e]. 

FIFTH CLAIM FOR RELIEF 
Violations of Exchange Act Sections 15(a) 

 
84. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 70. 

85. Legend, while not registered with the Commission as a broker or dealer or associated 

with a registered broker or dealer, made use of the mails or other means or instrumentality of 

interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale 

of, securities other than exempted securities or commercial paper, bankers’ acceptances, or 

commercial bills. 

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86. By reason of the foregoing, Legend, directly or indirectly, has violated and, unless 

enjoined, will again violate Exchange Act Section 15(a)(1) [15 U.S.C. § 78o]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter: 

I. 

An Order temporarily and preliminarily, and a Final Judgment permanently, restraining and 

enjoining Legend, its agents, servants, employees, and attorneys and all persons in active concert or 

participation with any of them from violating, directly or indirectly, Securities Act Sections 5(a), 5(c), 

and 17(a) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)], Exchange Act Sections 10(b) and 15(a) [15 U.S.C. 

§§ 78j(b) and 78o(a)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and Advisers Act Sections 

206(1), 206(2), 206(3), and 206(4) [15 U.S.C. §§ 80b-6(1), (2), (3), and (4)] and Rule 206(4)-8 

thereunder [17 C.F.R. § 275.206(4)-8]; 

II. 

An Order temporarily and preliminarily, until such time as a receiver over Legend and the 

Legend Funds is appointed, freezing the assets of Legend and the Legend Funds; 

III. 

An Order temporarily and preliminarily, and a Final Judgment permanently, appointing a 

receiver over Legend and the Legend Funds; 

IV. 

An Order temporarily and preliminarily, through a Final Judgment, enjoining the filing of 

any bankruptcy, foreclosure, receivership, or other actions by or against Legend and the Legend 

Funds; 

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V. 

An Order requiring Legend to submit a verified accounting of the assets of Legend and the 

Legend Funds and the use of all investor funds raised by Legend and the Legend Funds; 

VI. 

An Order temporarily, and preliminarily, through a Final Judgment, enjoining Legend and 

any person or entity acting at their direction or on their behalf, from destroying, altering, concealing, 

or otherwise interfering with the access to relevant documents, books and records; 

VII. 

A Final Judgment ordering Legend to disgorge the ill-gotten gains they received as a result of 

the violations alleged here and to pay prejudgment interest thereon pursuant to Exchange Act 

Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]; 

VIII. 

A Final Judgment ordering Legend to pay civil money penalties pursuant to Securities Act 

Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and 

Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and 

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IX. 

A Final Judgment granting any other and further relief this Court may deem just and proper. 

 
Dated: June 22, 2023 
 New York, New York 
 

 
/s/ Antonia M. Apps      
ANTONIA M. APPS 
REGIONAL DIRECTOR  
Sheldon L. Pollock 
Steven G. Rawlings 
Lee A. Greenwood 
Daniel Loss 
Suzanne M. Bettis 
Joshua D. Tannen 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street, Suite 20-100 
New York, New York 10004 
212-336-5571 (Loss) 
[email protected]    

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