The Securities and Exchange Commission has won a major victory in the ongoing fight against fraudulent investment schemes. Vika Ventures LLC – a company that was previously accused of fraudulent securities offerings by the SEC – faced the consequences in the form a final judgement on August 9,2023. Vika was hit hard by the gavel, as the court ordered Vika to pay an obscene civil money penalty amounting to nearly nine millions dollars. But what was the cause of this historic ruling?
Vika Ventures LLC and the SEC
Imagine a venture-capital firm promising to sell and offer securities of private companies just before an Initial Public Offering (IPO). Imagine that the same venture capital firm does not actually own these securities or claim any rights to them. In its complaint, filed on December 7th 2022, the SEC painted this picture of Vika Ventures’ co-founder George Iakovou.
Vika Iakovou and the SEC were accused of defrauding 46 individual investors of more than six million dollars. Vika and Iakovou allegedly duped 46 investors out of more than $6 million by making them believe that they were investing in promising IPOs when they were actually buying thin air.
Penelope Zbravos was also named in the complaint as being negligently responsible for tasks that maintained this fraud scheme. But was Penelope Zbravos also held accountable?
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The Court’s Decisions
The court took action on June 22, 2023. It entered a consent judgement that prohibits Zbravos from violating Section 17(a).(3) of the Securities Act of 1933. The court said that any monetary damages against Zbravos would be determined by the Commission upon its subsequent request.
The court then entered Amended Default judgments against Iakovou on June 30, 2023. The court’s judgment prohibited them from violating the anti-fraud provisions of Securities Act and Securities Exchange Act of 1933, and also imposed a conduct-based injunction as well as an officer and director ban against Iakovou. The court allowed the Commission to pursue further monetary damages against the defendants.
The Final Judgment
The SEC filed a motion with the district courts in early August to assess a penalty on Vika. The court entered a final judgment in Vika’s favor on August 9, 2023. Vika was prohibited from violating Section 17a) Securities Act, Section 10b) Exchange Act and Exchange Act Rules (10b-5a, (b) and (c). Vika also had to pay $8,929 120 in civil penalties.
Allison M. Rochford & Michelle I. Bougdanos led the SEC’s investigations, which was overseen by David Frohlich & Carolyn Welshhans. James Carlson led the litigation. The SEC is committed to protecting investors, maintaining fair and orderly markets, and ensuring that they are efficient.