Investment Platform Fined for Misleading Investors in Asset-Backed Securities Offering

The SEC charged an alternative investment platform for misleading investors by failing to disclose "critical information" in an asset-backed securities offering.

The SEC found that the platform made five securities offerings to finance loans for the deconstruction of retired ships. The retired ships were used as collateral. The SEC said that the platform discovered that the ships securing the loans were "broken up" or deconstructed without "repayment of the loans those ships secured," and "that a number of other ships that served as collateral for these loans could not be located because their tracking systems were not operating." The SEC said that the platform failed to disclose this material information to investors in a subsequent sixth security offering.

The SEC found that the platform violated Securities Act Section 17 ("Fraudulent Interstate Transactions"), Advisers Act Section 206 ("Prohibited transactions by investment advisers") and Rules 206(4)-7 ("Compliance procedures and practices") and 206(4)-8 ("Pooled investment vehicles") thereunder.

To settle the charges, the platform agreed to (i) cease and desist from further violations, (ii) a censure, (iii) disgorgement, (iv) prejudgment interest and (v) civil monetary penalties totaling $1,939,220.