SEC Charges Linqto Leaders In $430 Million Retail Fraud

The U.S. Securities and Exchange Commission charged Linqto founder William Sarris and former executive Joseph Endoso on Oct. 9, alleging they defrauded thousands of retail investors who used the San Jose, California-based platform to buy exposure to private companies.

Between 2021 and 2024, a Linqto subsidiary sold more than $430 million of special purpose vehicles containing interests in private companies, according to the SEC’s complaint. Special purpose vehicles are entities created to hold specific assets or investments.

The SEC alleges that Sarris and Endoso misrepresented the price and availability of the investments. Linqto presented most offerings as priced at or below current market value, although the complaint says nearly all were priced above fair value.

The executives also allegedly described some offerings as “sold out” or “fully subscribed” while additional shares remained available for purchase.

The complaint alleges that Linqto told investors an algorithm automatically set prices based on demand. Company personnel instead set the prices manually, according to the SEC. The agency also claims the executives promoted Linqto as compliant with federal securities laws after the company’s legal counsel warned that its operations violated those laws.

The SEC accused Sarris and Endoso of selling securities in unregistered transactions to unaccredited investors through Linqto’s subsidiary. Unaccredited investors generally do not meet federal income or net-worth standards for accredited investors. The agency also charged the men with operating unregistered investment companies.

The charges cite Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and aiding and abetting violations of the Investment Company Act.

The SEC is seeking court orders that would bar the men from serving as officers or directors. It is also seeking the return of allegedly ill-gotten gains, interest and civil penalties. The case was filed in the U.S. District Court for the Northern District of California.

The U.S. Attorney’s Office for the Southern District of New York and the FBI assisted with the SEC’s investigation. Linqto previously faced scrutiny over its relationship with Ripple, which ended its ties with the platform during a Department of Justice investigation.

The SEC’s complaint contains allegations, not a finding of liability. Sarris and Endoso will have an opportunity to contest the claims in court.