The Securities and Exchange Commission barred an investment advisor from the industry for recommending and selling unregistered 1 Global Capital securities. 1 Global is the firm at the heart of a massive fraud scheme that raised more than $320 million in illegal securities from thousands of investors.
Michael Pellegrino, the co-founder and head of SEC-registered Goldstone Financial Group, was unaware that 1 Global Capital was a fraud when recommending their notes to clients, according to the SEC’s settlement order with Pellegrino and his brother Anthony Pellegrino, a co-founder of Goldstone.
But the duo did not reveal they were receiving referral fees when clients invested in 1 Global’s notes, according to the commission.
The settlement is the latest development in the 1 Global Capital saga, in which former CEO Carl Ruderman was charged in 2018. 1 Global was purportedly a merchant lender providing short-term loans for small and medium-sized businesses as an alternative to traditional bank loans. The company claimed it made $1.30 to $1.40 for every dollar invested in these cash advances, but investors never received any interest payments and eventually lost their principal, according to the SEC.
While 1 Global said most investors’ funds were paying for these loans, in reality Ruderman and the firm used much of the raised funds for other purposes. The SEC said Ruderman misappropriated at least $32 million for…
