October 20, 2020
On September 18, 2020, the Securities and Exchange Commission filed an Order Instituting Administrative and Cease-and-Desist Proceedings against unregistered investment adviser Keyport Venture Advisors LLC (Keyport Advisors), and its two principals, John LoPinto, and Robert Wilkos (collectively referred to as the “Respondents”), for violations of securities industry rules. LoPinto, a resident of State Island, New York, and Wilkos, a resident of Holmdel, New Jersey, each own 50 percent of Keyport Advisors.
According to the SEC Order, the Respondents raised over $1.5 million from retail investors between October 2019 and July 2020 for investments in Keyport Venture Partners LLC Fund, a pooled investment vehicle that sought to invest in shares and interests of pre-IPO companies including food and technology companies. The SEC asserts that LoPinto and Wilkos misrepresented that a new series of the Fund already held shares of a pre-IPO online rental marketplace when, in reality, they were unable to locate and secure shares of this company for several months after investors invested $198,000 in the new series. While the investors’ capital contributions were tied up for several months, the Respondents accepted all fees associated with the series, including those related to due diligence, management and other expenses.
In anticipation of the SEC Cease-and-Desist, the Respondents submitted an Offer of Settlement, which the SEC has accepted. The SEC censured the Respondents and ordered them to cease and desist from committing or causing any violations and any future violations of Sections 206(4) of the Advisers Act. The SEC also ordered LoPinto and Wilkos to each pay $40,000 in civil penalties.