SP Investco Holdings LLC Lawsuit | Private Placement Risks
The White Law Group is investigating potential claims involving SP Investco Holdings, LLC, a Vero Beach, Florida private fund that raised $8.8 million from 84 investors starting in November 2019. Below is what the fund’s SEC filing discloses and what options investors may have.
SP Investco Holdings was sold as a Regulation D private placement with limited public disclosure. Investors with questions about this offering can talk with our FINRA arbitration attorneys about a possible claim against the firm that sold it.
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What Is SP Investco Holdings, LLC?
SP Investco Holdings, LLC is a Delaware limited liability company formed in 2019. It describes itself as a pooled investment fund and claims an exclusion from registering as an investment company. The filing lists True North Resources, LLC among its related persons. It shares an address and leadership with Millstone Creek, LLC, another Reg D offering.
SP Investco Holdings Offering Terms
The Form D, signed February 4, 2020, reports:
- Exemption claimed: Rule 506(b) of Regulation D
- Type of security: Pooled investment fund interests
- Total offering amount: $8,765,000, reported as fully sold
- Number of investors: 84
- Date of first sale: November 8, 2019
- Sales commissions: $876,500
- Proceeds paid to executive officers, directors or promoters: $1,340,550
The filing names Green Vista Capital, LLC of Winter Park, Florida, as the firm receiving sales compensation. The offering was marketed in 26 states.
Broker Duties When Selling Private Funds
FINRA Regulatory Notice 10-22 requires brokerage firms to investigate a private placement before recommending it. When a firm has ties to the issuer, FINRA expects it to address that conflict and not rely on the issuer’s word. Brokers must also have a reasonable basis to believe the investment fits each customer under FINRA Rule 2111.
Risks of Investing in SP Investco Holdings LLC
- Steep costs. Sales commissions equal 10% of the money raised. Another $1.34 million, about 15%, went to the fund’s officers, directors or promoters.
- Fewer legal protections. As an unregistered fund, it does not have to follow the rules that govern mutual funds.
- Limited information. The fund declined to disclose its net asset value.
- Illiquid. Fund interests do not trade publicly and may be impossible to sell early.
Private Placement Investment Recovery
Investors who lose money in private placement investments may be able to recover it from the brokerage firm that sold the fund. These claims typically allege poor due diligence, unmanaged conflicts of interest, or unsuitable recommendations. They are generally pursued through FINRA arbitration.
Contact The White Law Group
The White Law Group, national securities fraud attorneys with offices in Chicago and Seattle, is investigating potential claims for SP Investco Holdings investors. Call (888) 637-5510 for a free consultation, or contact us online.
Frequently Asked Questions
How can I get my money back?
Your claim is usually against the brokerage firm that sold you the investment, and it is generally filed through FINRA arbitration. Most brokerage account agreements typically contain a pre-dispute arbitration clause that sends disputes to arbitration rather than court. Many investors don’t know the clause exists, but arbitration can still produce a monetary award or settlement.
What does it mean that SP Investco is an unregistered private fund?
It means the fund pools investor money without registering under the Investment Company Act of 1940, the law that governs mutual funds. Investors don’t get that law’s protections, such as independent oversight and regular public reporting. They have to rely much more heavily on their broker’s research.
Is the brokerage firm responsible if the investment goes bad?
It can be. FINRA requires firms to supervise their brokers and to research and manage conflicts in the private placements they sell. A firm that missed or ignored those duties may be liable for failing to supervise.
