The SEC has intensified scrutiny of firms selling special purpose vehicles that claim to give investors exposure to shares in private companies, according to the Wall Street Journal. SEC examiners are requesting that registered investment advisers produce records confirming their SPVs genuinely hold or are otherwise exposed to the shares being marketed. The examinations can involve document requests and in-person components, lasting from several weeks to a year. Regulators moved after a rise in investor complaints and a marketing push by such funds ahead of SpaceX's IPO and Anthropic's planned IPO. One SPV fund touted pre-IPO exposure to SpaceX but later told investors the stock had been sold before trading began, limiting gains. Another firm that sold pre-IPO stakes filed for bankruptcy last year. Linqto, which marketed stakes in Ripple, SpaceX, and Anthropic, found its customers never actually owned the securities and has since filed for bankruptcy, with the SEC investigating.
SEC investigation and bankruptcy due to customers not owning securities; direct regulatory and legal impact.
