The two co-founders of Advanced Equities, a Chicago-based venture capital investment bank, have received Wells notices from the Securities and Exchange Commission, according to FINRA filings. The SEC sent the notices to Chairman Keith Daubenspeck and CEO Dwight Badger in January 2012, notifying them that the staff may take enforcement action related to a private offering in 2009.
“I am addressing the staff’s concerns and I am prepared to aggressively defend myself should it become necessary,” Badger said, in a FINRA filing.
Advanced Equities has its roots in venture capital and private equity deals, which it sold through its retail broker arm and its former independent broker/dealer, First Allied Securities. First Allied spun off from Advanced Equities in August 2011 to focus on its core business—helping its 1,000 advisors grow their practices. It also wanted to distance itself from the private equity focus, sources said.
At the time of spin-out, Mike Robertson, CEO of Robertson Wealth Management, an affiliate of First Allied, said that Advanced Equities was hoping First Allied would be a distribution arm for the P/E deals, but the firm’s FAs realized there were too many risks associated with selling illiquid investments, Robertson said. Such investments have a higher failure rate, he said, and this risk profile didn’t match up with that of First Allied. Reps at First Allied are still able to sell private equity deals by Advanced Equities, which have been a conversation starter for the FAs with wealthy clients.
It’s unclear whether these are the private offerings that the SEC will be investigating, although some speculate they are. According to a recruiter, who declined to be named, Advanced Equities received a lot of bad press in 2009 for the sale of private placements that it brought to market.
Daubenspeck and Badger did not return calls by press time. Adam Antoniades, president of First Allied, also didn’t return a call.