August 26, 2019
FINRA recently filed a Complaint against registered representatives Gurpreet Chandhoke and Stephen Shea for failing to disclose private securities transactions (PSTs) and other outside business activities to the member firms between April 2014 and October 2016. During this time, Chandhoke and Shea were associated with member firms Gordian Investments, LLC, Penserra Securities, LLC, and Arete Wealth Management, LLC in Orinda, California. Chandhoke and Shea also co-founded VII Peaks Capital LLC, an investment advisory company that is registered with the Securities and Exchange Commission, in 2009.
In April 2014, while working for Gordian Investments, Chandhoke and Shea created AlesiaTech, a technology company meant to develop and provide software for data analytics. Chandhoke served as the Chief Executive Officer and Shea as the President, each participated in business activities including creating and distributing offering materials and soliciting investors. They allegedly participated in several PSTs while associated with Gordian and Arete totaling over $9.9 million.
Then, in October 2014, Shea and Chandhoke created PFU, LLC as a holding company through which, according to the FINRA Complaint, they intended to make real estate investments and lease property. FINRA alleges that they opened and maintained four separate bank accounts, making 37 cash deposits totaling $72,950. Each deposit was made at ATMs around the San Francisco Bay area and Los Angeles and did not exceed $10,000; an attempt, FINRA alleges, to evade federal reporting requirements that would have cause financial institution to file Currency Transaction Reports.
In November 2014, when Chandhoke was not associated with a FINRA member firm, he opened a line of credit under the name Chandhoke Holdings, LLC. In May 2016, he secured a $250,000 loan for Chandhoke Holdings and used this line of credit, without acknowledging that the line of credit would be used to purchase, carry, or trade in securities, upon joining Arete Wealth Management.
Finally, Chandhoke held a position as “board manager” at Relativity Media, LLC, the operating company of Relativity Holdings LLC, a “privately-held Hollywood studio with a revolutionary, full-integrated, and diversified global media platform.” Between May and October 2015, while associated with Penserra Securities, LLC, Chandhoke failed to notify this outside business activity.
This alleged activity is in violation of NASD Rules 3040 and 3050(c) and FINRA Rules 3270, 3280, and 2010. FINRA Department of Enforcement is requesting relief to make findings of fact and conclusions of law that Gurpeet Chandhoke and Stephen Shea committed the violations alleged in the Complaint and order that sanctions and fines be imposed under FINRA Rule 8310(a) and 8330.