The Securities and Exchange Commission has sued two former Linqto executives over the way the online platform sold exposure to private companies. The civil complaint names founder William Sarris and former executive Joseph Endoso. It alleges that they misled retail investors about prices, available inventory, automated pricing and compliance with securities law. The case was filed on October 9 in federal court in Northern California.
How the investment structure worked
Linqto did not simply transfer private-company shares directly to each customer. According to the complaint, a subsidiary acquired interests in privately held companies, allocated economic interests in those holdings to special-purpose vehicles, and sold units in those vehicles through Linqto’s platform. The SEC says the subsidiary sold more than $430 million of these units to thousands of retail investors from 2021 through 2024.
That structure adds a layer between an investor and the underlying company. A buyer must evaluate both the private asset and the vehicle through which the exposure is offered. The complaint focuses on what Linqto allegedly told customers about that second layer, including its pricing process and the availability of units.
Four allegations about the sales process
The SEC says Linqto described prices as matching current market conditions or as being below market, while internal analyses allegedly showed that nearly all offerings were priced above fair value. The agency also alleges that the platform displayed some securities as sold out or fully subscribed even though additional units remained available.
A separate claim concerns dynamic pricing. Linqto allegedly told investors that an algorithm adjusted certain prices as demand changed. The complaint says employees continued to set prices manually during part of that period and that Sarris retained substantial control after the algorithm began operating.
The fourth issue is regulatory status. The SEC alleges that Linqto promoted itself as federally regulated and compliant after outside counsel had advised that parts of the business violated federal securities rules. The complaint also accuses the defendants of operating unregistered investment companies and selling unregistered securities to unaccredited investors without a valid exemption.
What the filing does and does not establish
These are allegations in a civil complaint, not findings that the defendants are liable. The SEC is asking the court for injunctions, disgorgement with prejudgment interest, civil penalties, and officer-and-director bars. The litigation release does not state that the court has awarded any of those remedies.
For readers assessing a pre-IPO platform, the filing identifies several records worth separating. The purchase price paid for the underlying private shares is different from the price charged for a vehicle unit. A platform’s inventory is different from a scarcity message shown to customers. An automated pricing claim should be checked against who can override the model, and a statement about legal compliance should be tested against registration records and offering documents.
The complaint therefore offers a practical due-diligence framework without deciding the case: trace the ownership chain, identify every fee or markup, ask how prices are set, verify whether units are actually unavailable, and confirm which entity and offering are registered or exempt. Those checks address the mechanics that the SEC says were obscured here.
Source: BlockchainReporter.