SEC settles fraud charges against Adit Ventures over pre-IPO share deals

The U.S. Securities and Exchange Commission (SEC) has settled fraud charges against Adit Ventures Management, its founder, and three partners over their handling of pre-IPO investments in companies including SpaceX and Klarna. The settlement, announced on Monday, follows allegations that the investment adviser used false claims to solicit investments and diverted client money for its own benefit, including taking undisclosed loans on favorable terms.

Adit Ventures agreed to a consent order involving disgorgement and a civil penalty without admitting or denying the allegations. The order requires approval from a federal judge. Eric Munson, the firm's founder and chief investment officer, rejected the charges in a statement, saying he settled because fighting the case would not benefit him or his investors.

The SEC's complaint accused Munson of falsely telling an investor that a fund held shares in a private pre-IPO company. It also alleged the defendants bought pre-IPO shares and then had client funds purchase those same shares at inflated prices, misrepresenting the actual cost.

The case highlights growing interest in private market investments as companies delay public listings. Regulators have warned about fraud risks in this space. Last December, a New York investment manager was indicted over an alleged scheme involving nonpublic shares of drone maker Anduril Industries. Earlier this year, AI company Anthropic cautioned investors about funds claiming to offer indirect access to its stock, stating that unauthorized transfers or offers were void.