3 Investment Adviser Representatives Acting as Unregistered Brokers Settle SEC Charges

On January 14, 2025, the Securities and Exchange Commission (SEC) announced that three investment advisor representatives acting as unregistered brokers, Tamir Shabat, Danny Z. Spiegel, and Joseph J. Orlando, Jr., had settled charges against them totaling approximately US $540,000.

Shabat, Spiegel, and Orlando, Jr., investment advisors with VCP Financial LLC, acted as unregistered brokers by selling membership interests in LLCs that were alleged to be the shares of pre-Initial Public Offering (pre-IPO) companies.

Separately, the SEC announced settlement charges against VCP Financial LLC, stating that it found the firm in violation of Section 206(2) of the Advisers Act. Section 206(s) prohibits investment advisors from directly or indirectly engaging in any transaction, course of business, or practice that is fraudulent, deceptive, or manipulative. (VCP Financial LLC required retail clients to execute improper liability disclaimers.)

Details of Violations

From June 2019 until March 2020, Spiegel, Shabat, and Orlando, Jr. solicited investors for another company called StraightPath Venture Partners, LLC. StraightPath offered investments in purported pre-IPO companies.

(Additionally concerning was that StraightPath Venture Partners LLC and its principals, Brian K. Martinsen, Michael A. Castillero, Francine A. Lanaia, and Eric D. Lachow (collectively, “the Defendants”), were previously charged by the SEC for selling pre-IPO shares that they didn’t own.

SEC Findings

The SEC determined that Spiegel and Shabat held leading roles at VCP Financial (as well as a predecessor entity called LPS Financial) and that they established a new organization in 2019 with the purpose of entering into agreements with StraightPath.

This agreement afforded them payments relating to investors they solicited to invest in StraightPath Funds.

Furthermore, the Shabat and Spiegel sales team, including Orlando, Jr., were not registered as brokers.

All three investment adviser representatives, Shabat, Spiegel, and Orlando, Jr., provided marketing materials to investors, alongside merit-based investment advice. In return, they received transaction-based compensation. The SEC found these activities clearly indicated those of brokers, yet they were not registered as such.

Penalties & Settlements

The SEC found that Orlando, Jr., Spiegel, and Shabat each violated Section 15(a) of the Securities Exchange Act of 1934. 

Shabat, Spiegel, and Orlando, Jr. neither admitted nor denied the SEC findings, and agreed settlements as follows:

• SEC v. Tamir Shabat Payment of disgorgement and prejudgment interest to the total of $180,559, together with a civil penalty of $40,000.
• SEC v. Danny Z. Spiegel Payment of disgorgement of $142,083.01, prejudgment interest of $33,790.76, and civil penalties of $40,000.
• SEC v. Joseph J. Orlando Jr. Total payments of disgorgement, prejudgment interest, and civil penalties of $103,225.

All three unregistered brokers, Shabat, Spiegel, and Orlando, Jr., agreed to a 6-month penny stock and industry suspension.

Additionally, the SEC found that VCP Financial violated Section 206(2) of the Investment Advisers Act of 1940. The firm consented to pay a civil penalty of $100,000 without admitting or denying the SEC’s findings.