The Securities Arbitration Law Firm of KlaymanToskes announced today that it is investigating claims on behalf of customers of Advanced Equities who invested in an alternative energy company in Silicon Valley, reportedly Bloom Energy. Yesterday, the Securities and Exchange Commission (“SEC”) charged Advanced Equities, Inc., a broker-dealer registred with the Financial Industry Regulatory Authority (“FINRA”), and co-founders Dwight O. Badger and Keith G. Daubenspeck in connection with private offerings in 2009 and 2010 on behalf of an alternative energy company in Silicon Valley, California. Crain’s Chicago Business and Dow Jones have reported that the company is fuel cell maker Bloom Energy. The SEC’s allegations against Advanced Equities and its co-founders include misleading investors in two private equity offerings and supervisory failures related to the offerings. A copy of the SEC’s Order can be found by clicking here.
According to the SEC, Badger led the sales effort for the offerings and made misstatements about the energy company’s finances that Daubenspeck did not correct, thus failing to reasonably supervise Badger. Daubenspeck co-founded Advanced Equities with Badger and was the former chief executive of its parent company. Daubenspeck is the chairman of the parent company’s board. Badger, Daubenspeck, and their firm agreed to settle the SEC’s charges.
According to the SEC’s order, Badger said in the 2009 offering that the energy company had more than $2 billion of order backlogs when the backlog never exceeded $42 million. He also said it had a $1 billion order from a national grocery store chain even though the store only had placed a $2 million order and signed a non-binding letter of intent for future purchases. Badger said that the company had been granted a U.S. Department of Energy loan exceeding $250 million when it had applied for a $96.8 million loan, and he again misstated the information about the loan application during the follow-up offering in 2010.
“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 will continue to be vigilant in uncovering fraud in private securities offerings and holding registered securities professionals accountable.”
According to the SEC’s order, Daubenspeck participated in at least two internal sales calls with Advanced Equities brokers during the 2009 offering and remained silent after he heard Badger make misstatements about the company’s order backlog, grocery store order, and Department of Energy loan application. Despite the red flags raised by the misstatements and the obvious risk that false information would be repeated to investors, Daubenspeck did not take reasonable steps to correct the misstatements and thus failed reasonably to supervise Badger.
Advanced Equities agreed to pay a $1 million penalty, and agreed to be censured and to cease and desist from committing or causing any future violations of the securities laws it was found to have violated. The firm also agreed to numerous undertakings including hiring an independent consultant to review its sales policies and procedures. Badger agreed to pay a $100,000 penalty and be barred for one year from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent. Daubenspeck agreed to pay a $50,000 penalty and a one-year supervisory suspension. Advanced Equities, Badger, and Daubenspeck consented to the entry of the cease-and-desist order without admitting or denying the SEC’s charges.
Investors who purchased investments in Bloom Energy or other private equity offering from Advanced Equities are encouraged to contact KlaymanToskes to explore their legal rights and options. KlaymanToskes as signficiant experience in representing investors across the nation in securities arbitration proceedings against full service brokerage firms.