Home Alts News SEC Fines YieldStreet $1.9 Million Over Disclosure Failures

SEC Fines YieldStreet $1.9 Million Over Disclosure Failures

SEC Fines YieldStreet $1.9 Million Over Disclosure Failures. Adviser, broker, broker-dealer, financial services, investment adviser, RIA, SEC

The Securities and Exchange Commission announced a settled action against New York-based YieldStreet Inc. and its registered investment adviser subsidiary, YieldStreet Management LLC, for failing to disclose “critical information” to investors in a $14.5 million asset-backed securities offering.

In September 2019, YieldStreet offered securities to finance a loan it made to companies to transport and deconstruct a retired ship. It did not tell investors of a heightened risk that they would not be able to seize the ship if the borrowers stole the funds and defaulted, as they ultimately did.

“YieldStreet aims to unlock the complex alternative investments market for retail investors but failed to disclose glaring red flags it had about the security of the collateral backing this offering,” said Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. “As this case shows, we are committed to ensuring that investors in any asset class, including ‘alternative’ asset classes, receive complete and accurate disclosures about those investments.”

Without admitting or denying the findings, YieldStreet consented to the entry of an SEC order finding that they violated certain antifraud and other provisions of the federal securities laws. The SEC’s order requires YieldStreet to cease and desist from these violations and to pay more than $1.9 million in penalties, disgorgement, and interest.

A representative for Yieldstreet, which did not admit or deny the SEC’s findings, said the firm brought the marine borrower fraud to the attention of authorities three years ago.

“We continue to aggressively pursue recovery for our investors throughout ongoing litigation and collection efforts both here and abroad,” the spokesperson said in a statement.

(Reuters contributed to this article.)

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