Securities and Exchange Commission v. Swapnil J. Rege and SwapStar Capital, LLC was filed in the U.S. District Court for the District of New Jersey on October 26, 2021, claiming the defendants violated the Investment Advisors Act by engaging in fraudulent or deceptive conduct upon an advisory client and charging Rege with violating a 2019 SEC Order barring him from associating with an investment adviser.

Defendants are Swapnil J. Rege (“Rege”), and his company SwapStar Capital, LLC (“SwapStar”).  The complaint also named Reema Rege, Rege’s wife, as a relief defendant. Prior to 2019, Rege, in his role as a private fund investment adviser, committed fraud against investors by mispricing investments, overstating value of funds, and charging excessive management fees, which led to the SEC’s 2019 Order prohibiting Rege from associating with or acting as an investment adviser.  According to the SEC’s complaint, Rege immediately violated this Order and used SwapStar to continue acting as an investment adviser.

The SEC alleges that Defendants have raised more than $10 million from neighbors, friends, and family by misrepresenting that client money would be invested in securities for guaranteed annual returns of 40%-60%. However, Rege apparently used the funds to pay his personal expenses, some clients’ fictitious gains, and returned principal investments to other clients. Further, the SEC alleges that client funds were transferred to two brokerage accounts in Rege’s wife’s name and seeks to have those funds returned.

In addition to the plea to enforce the SEC’s 2019 Order, the complaint seeks preliminary and permanent injunctions, disgorgement, prejudgment interest, civil penalties, an asset freeze, and other emergency and ancillary relief. As of September 30, 2021, Rege indicated that he intended to pay some of his clients back approximately $4.4 million, which will likely deplete Rege’s remaining assets.