On December 1, 2020, the SEC charged former broker Mark Lisser with fraud, after uncovering his boiler rooms that he used to sell shares of Knightsbridge Capital Partners fund, a fund that he managed. According to the SEC complaint, Lisser used his boiler room, high-pressure sales tactics to raise $2.1 million dollars from 71 retail investors. Of that $2.1 million, the SEC alleges he misappropriated $900,000. The SEC complaint further alleges that Lisser deposited some of the money in his personal accounts and used it to pay his credit card bills.
What is a Boiler Room?
“Boiler room” is the term the SEC uses to describe groups of salespeople who use intensive, high-pressure sales tactics to convince investors to buy securities, regardless of whether that security fits the investor’s needs. By working in tandem to create a swell of interested buyers, the stock’s price goes up, thus creating a misleading impression of the stock’s value. In a boiler room scenario, brokers reach out to investors via unsolicited phone calls or mailing campaigns. During the sales pitch, the boiler room sales team creates a rosy picture of the stock, without mentioning the potential for losses.
Why Did Knightsbridge Capital Partners Fund Lose Investors’ Money?
Mark Lisser allegedly created boiler rooms in Long Island, New York and Boca Raton, Florida. The “boiler rooms” solicited investors in Knightsbridge Capital Partners, an unregistered fund. In order to make shares of the fund look more attractive, the SEC alleges that Lisser defrauded investors with the following deceptive practices.
- The SEC alleges that sales representatives told potential investors that the Knightsbridge fund had purchased pre-IPO shares from employees of three well-known companies. The complaint alleges that Knightsbridge did not own any such pre-IPO shares when Lisser’s boiler rooms solicited investments. Further, once the fund did have some money, Lisser bought shares from third parties, and not employees. Even once the fund had some investments, they were not enough to cover the sales the fund had made to investors, according to the SEC complaint. Of the $2.1 million Knightsbridge raised, only about $1.2 million went toward investments.
- The SEC also alleged that the boiler room sales representatives mentioned in their sales pitch that Knightsbridge and the investors would be on the “same side of the trade,” meaning the salespeople would only make money once the companies had gone public and generated profits. In fact, Lisser had charged sales mark-ups of 14% to 62% and paid the Kinghtsbridge sales representatives upfront commissions.
Who is Mark Lisser?
Mark Lisser has not registered his broker’s license with a firm since 2016, when Garden State Securities fired him following allegations regarding his “pending historical complaints.” In total, Lisser has seven customer disputes on his BrokerCheck record, accessed on December 10, 2020. The SEC complaint states that the Knightsbridge boiler rooms operated from 2018 to 2019.
What Can Investors Do Now?
Investors should make efforts to recover any money they may have lost through investments in Knightsbridge Capital Partners fund. If you need a free case assessment, reach out to the experienced securities attorneys at Fitapelli Kurta. Call (877) 238-4175 or email email@example.com.