The Securities and Exchange Commission filed settled fraud charges against New York investment adviser Giovanni Pennetta on June 22, alleging he raised more than $10.5 million from investors between February 2021 and December 2025 by falsely claiming he could provide access to shares of a high-profile private company before its public listing. According to the SEC, neither Pennetta nor the entities he controlled ever owned or had access to the shares, while more than $6.2 million of investor money was diverted for personal expenses and to repay investors in a separate offering. The case highlights regulatory concerns about fraud in the growing market for pre-IPO shares, where investor demand for access to private companies before public listings has created opportunities for both legitimate investment vehicles and fraudulent schemes.
SEC Alleges Pennetta Falsely Claimed Ownership of Private Company Shares
According to the complaint filed in the U.S. District Court for the Southern District of New York, Pennetta managed NextGenTech Investments LLC through exempt reporting adviser Sestante Capital LLC. Between February 2021 and December 2025, he allegedly solicited at least six investors seeking exposure to a private technology company whose shares were unavailable on public markets.
The SEC alleges Pennetta represented that he or entities under his control either owned the company's shares or had direct access to acquire them. Investors subsequently committed more than $10.5 million to NextGenTech based on those representations. The regulator says those claims were false.
According to the complaint, neither Pennetta nor any of his controlled entities ever owned the private company's shares or possessed the ability to acquire them on behalf of investors. Rather than purchasing the securities, the SEC alleges Pennetta diverted much of the money elsewhere. The SEC further alleges that part of the investor money was used to repay an investor in a separate NextGenTech offering rather than purchasing securities.
Pennetta agreed to settle the civil action, subject to court approval, without admitting or denying the allegations. In a parallel criminal case, he pleaded guilty to one count of wire fraud in March 2026.
Private Company Share Market Creates Fraud Opportunities
The case illustrates how demand for private company shares has created opportunities for both legitimate investment vehicles and fraudulent schemes. Over the past five years, companies have remained private for longer periods while achieving valuations once associated only with publicly traded corporations, increasing demand among wealthy individuals, family offices, and institutional investors seeking exposure before an eventual stock market listing.
Unlike public equities, private company shares generally trade through negotiated secondary transactions that are subject to shareholder agreements, transfer restrictions, company approval rights, and limited liquidity. That complexity creates information asymmetries that fraudsters can exploit. The SEC has repeatedly warned investors that access to pre-IPO shares often depends on complex legal agreements and existing shareholder approvals.
SEC Charges Include Permanent Injunction and Industry Bar
The SEC charged Pennetta with violating the antifraud provisions of the Securities Act, the Securities Exchange Act, and the Investment Advisers Act. As part of the proposed settlement, Pennetta agreed to a permanent injunction preventing future violations of the securities laws cited in the complaint.
He also agreed to a permanent bar prohibiting him from participating in the issuance, purchase, offer, or sale of securities for others, although he may continue trading for his own personal account. The court will determine at a later stage whether Pennetta must pay disgorgement, prejudgment interest, and civil penalties.
The civil settlement follows Pennetta's March 2026 guilty plea to one count of wire fraud in a parallel criminal prosecution brought by the U.S. Attorney's Office for the Southern District of New York. The coordinated actions reflect the SEC's continued reliance on parallel criminal investigations in significant investment fraud cases.
FAQ
What did Giovanni Pennetta allegedly do to defraud investors?
According to the SEC complaint filed June 22, Pennetta raised more than $10.5 million from at least six investors between February 2021 and December 2025 by falsely claiming he could provide access to shares of a private company before its public listing. The SEC alleges neither Pennetta nor entities he controlled ever owned or had access to the shares, and more than $6.2 million was diverted for personal expenses and to repay investors in a separate offering.
What penalties did Pennetta agree to in the SEC settlement?
Pennetta agreed to a permanent injunction preventing future violations of securities laws and a permanent bar prohibiting him from participating in the issuance, purchase, offer, or sale of securities for others, although he may continue trading for his own personal account. The court will determine at a later stage whether he must pay disgorgement, prejudgment interest, and civil penalties. He pleaded guilty to one count of wire fraud in March 2026 in a parallel criminal case.
