Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—S.D.N.Y.: Investment adviser charged with fraud, joint arrangement rule violations, (May 2, 2025)

By Rebecca E. Hoffman, J.D.

Despite offering documents claiming that a board of directors would make investment decisions for the defendant’s fund, the defendant ran the company on his own.

The SEC, on April 29, brought an action against a New York investment adviser who solely owned and managed an unregistered fund and a business development company, owned those entities’ advisory firms, and was the sole owner of other entities that borrowed money from the first two. The complaint alleges Securities Act, Exchange Act, and Advisors Act violations, as well as violations of the Investment Company Act for his failure to obtain an SEC order approving the “joint arrangement” whereby his companies made loans to other companies in which he had an interest (SEC v. Taller, No. 25 Civ. 3537 (S.D.N.Y. Apr. 29, 2025)).

The defendant owned Vision BioBanc Holdings, LLC, and StHealth Capital Investment Corp. and was their CEO during the relevant period. In 2020, he disseminated “private placement memoranda” to inform prospective investors of Vision Holdings’ offerings. These documents identified the company’s five-member board of directors. In reality, the defendant alone ran the company, and an advisory entity the defendant also owned advised it, “without any independent supervision or oversight,” the complaint said. The offering documents also falsely stated that an independent auditor was attending to Vision Holdings. According to the complaint, “reasonable investors” would have wanted this information before deciding to invest.

Collective conflicts. The defendant directed StHealth Capital and Vision Holdings to make loans to two other companies in which the defendant had an interest. Another company, an alter ego for the defendant, earned management fees for crypto transactions made with the loaned funds. The transactions and activities gave rise to multiple undisclosed conflicts of interest, the complaint asserted. The defendant also directed Vision Holdings to transfer money to one of his other companies, and misappropriated funds from StHealth Capital by using investor money to reimburse improper expenses.

Notably, “[a]s investment advisers to StHealth Capital, both StHealth Advisors and Taller were fiduciaries to StHealth Capital and, thus, owed StHealth Capital affirmative duties of utmost good faith and full and fair disclosure of all material facts.” In failing to disclose the conflicts of interest, and in misappropriating funds, the defendant breached these duties, the SEC alleged.

Varied violations. The complaint stated that the defendant violated Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Advisors Act Sections 206(1) and (2). In addition, he ran afoul of Section 57(a)(4) and Rule 17d-1 of the Investment Company Act in that, while he was a principal of StHealth Capital, he participated in a “joint enterprise or other joint arrangement or profit-sharing plan in which StHealth Capital was a participant.”

The SEC seeks disgorgement, prejudgment interest, civil monetary penalties, and asks that the court permanently prohibit the defendant from “serving as an officer or director of any company that has a class of securities registered under Exchange Act Section 12 … or that is required to file reports under Exchange Act Section 15(d).”

The case is No. 25 Civ. 3537.

Attorneys: Todd Daniel Brody for the SEC.

Companies: Vision BioBanc Holdings, LLC; StHealth Capital Investment Corp.

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