(CN) - A Chicago-based investment firm and its co-founders agreed to pay more than $1 million to settle the SEC's claim that they misled investors in two private equity offerings for an alternative energy company in Silicon Valley.
The Securities and Exchange Commission charged registered broker-dealer and investment firm Advanced Equities and its co-founders, Dwight Badger and Keith Daubenspeck, with "misstatements and omissions and supervisory failures" during a $150 million private offering in 2009 and a follow-up offering in 2010 for an alternative energy company in Silicon Valley, Calif.
The agency's cease-and-desist order does not identify the energy company by name.
The SEC said Badger, 42, "made several misstatements" about the company's finances during sales calls, including telling brokers that the company had more than $2 billion in order backlogs and a $1 billion order from a nation grocery chain, when its actual backlog ranged from $10 million to $42 million, and the grocery chain's order was for $2 million.
Badger also claimed that the U.S. Department of Energy had already granted the company a loan of between $250 million and $300 million, though the company had applied for a loan of only $96.8 million, according to the SEC.
"Dwight Badger misled investors by embellishing key facts about the energy company's sales orders and its loan application to the Department of Energy," said Merri Jo Gillette, director of the SEC's Chicago Regional Office.
The SEC claimed that Daubenspeck, who was Badger's supervisor, "failed to respond to red flags that indicated that Badger and certain of Advanced Equities' other brokers were making misstatements to investors."
Advanced Equities agreed to settle the charges for $1 million. It also agreed to be censured and to hire an independent consultant to review its sales policies and procedures, among other undertakings.
Badger agreed to pay $100,000 and be barred for one year from associating with any broker, dealer, investment adviser, municipal securities dealer or transfer agent.
Daubenspeck, 49, agreed to a $50,000 fine and a one-year supervisory suspension.
Advanced Equities and its co-founders consented to the SEC's cease-and-desist order without admitting or denying the charges, the agency said.
Advanced Equities is an Indiana company headquartered in Chicago with more than 80 registered brokers in its offices in Chicago, San Francisco and New York.
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