SEC Charges Linqto Founder, Former Executive in $430M Pre-IPO Fraud

The SEC charged two former Linqto Inc. executives on Oct. 9 with defrauding thousands of retail investors who used the San Jose platform to buy exposure to pre-IPO “unicorn” companies. From 2021 through 2024, a Linqto subsidiary sold more than $430 million of special purpose vehicles holding private-company interests to retail buyers, according to the agency’s litigation release. The complaint names founder William Sarris and former executive Joseph Endoso and adds a civil enforcement action to the regulatory fallout surrounding Linqto since its collapse. The SEC alleges the pair misled investors in several ways. It says they falsely indicated that Linqto’s prices reflected current or below-market conditions when nearly all offerings were priced above fair value, and presented securities as “sold out” or “fully subscribed” when additional shares remained available. The complaint also alleges the executives claimed an algorithm automatically set platform prices that moved dynamically with investor demand, when Linqto personnel set prices manually. They touted compliance with federal securities laws after their own counsel told them the business violated those rules, the SEC said. Alongside the misrepresentation claims, Sarris and Endoso are charged with operating unregistered investment companies and selling securities in unregistered transactions to unaccredited investors through Linqto’s subsidiary. The charges span Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and aiding and abetting violations of the Investment Company Act. The SEC seeks injunctive relief, disgorgement with prejudgment interest, civil penalties, and officer and director bars against both men. The SEC said it received assistance from the U.S. Attorney’s Office for the Southern District of New York and the FBI, a sign of parallel attention from criminal authorities. Linqto’s earlier troubles included Ripple severing ties with the platform amid a Department of Justice investigation. The complaint is an enforcement step, not a finding of liability, and the allegations will be tested in the U.S. District Court for the Northern District of California. The case sharpens regulators’ focus on platforms that marketed private-company shares to retail buyers, a theme that echoes recent enforcement actions against crypto founders.