Founder of private-company investment firm charged with defrauding investors

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🗞️ Driving the news: US prosecutors announced criminal fraud charges Wednesday against two former Linqto chief executives over an alleged $450 million scheme to defraud thousands of investors seeking pre-IPO exposure
• William Sarris, 75, who founded the now-bankrupt Silicon Valley platform and led it for 14 years, was charged in Manhattan on six counts including securities fraud, wire fraud, broker-dealer fraud and conspiracy
• Joseph Endoso, 66, who succeeded him as CEO, pleaded guilty to securities fraud, broker-dealer fraud and conspiracy, and is cooperating.

🔭 The context: Linqto bought shares in private companies and sold customers units in special-purpose vehicles giving economic exposure to them but customers never held the shares directly
• The spread was the company's revenue as the alleged conduct ran from 2020 to 2025
• Prosecutors allege Sarris exploited the difficulty of valuing firms such as Anthropic, Ripple and SpaceX by manufacturing "false scarcity" and charging markups that inflated prices and the value of his own stake, which he sought to cash out
• The indictment states the median markup was 60%, with some transactions exceeding 200%, and alleges that under financial pressure in early 2025 Sarris sold securities allocated to clients to prop up revenues

🌍 Why it matters for corporate governance and sustainability: There is lesson to note on governance failure at the point where pricing power and disclosure duty meet
• Linqto controlled both the inventory and the displayed price of assets with no transparent exchange benchmark, and a related class action alleges internal legal memos in 2023 and 2024 flagged SEC and FINRA violations that went unheeded
• As private markets absorb more retail capital under lighter regulatory scrutiny than listed ones, that structural opacity becomes an investor-protection question beyond this single firm

⏭️ What's next: Endoso pleaded guilty on 27 August as Sarris is presumed innocent unless proven guilty
• A Texas bankruptcy judge approved Linqto's reorganisation plan in February, offering customers a choice between a liquidating fund and a closed-end fund holding private shares
• Recovery for more than 13,000 customers remains contested, with Linqto pursuing litigation against Forge Global and its parent Schwab over distribution obligations

💬 One quote: "William Sarris is innocent of these charges and intends to fight them" — Tim Treanor, lawyer for William Sarris

📈 One stat: A median markup of 60% on private securities sold through the platform, with some transactions carrying markups above 200%

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