NEW YORK Investment platform YieldStreet and a subsidiary have agreed to pay more than $1.9 million to settle U.S. Securities and Exchange Commission charges that they failed to give investors key information about risks, the regulator said on Tuesday.
YieldStreet, a New York investment firm that offers alternative assets to investors, failed to disclose a heightened risk related to the collateral behind one of its securities offerings, the SEC said in a statement.
In September 2019, YieldStreet offered securities to finance a loan it made to companies to transport and deconstruct a retired ship. It did not tell investors of a heightened risk that they would not be able to seize the ship if the borrowers stole the funds and defaulted, as they ultimately did.
"YieldStreet aims to unlock the complex alternative investments market for retail investors but failed to disclose glaring red flags it had about the security of the collateral backing this offering," SEC official Osman Nawaz said in the statement.
A representative for YieldStreet, which did not admit or deny the SEC's findings, said the firm brought the marine borrower fraud to the attention of authorities three years ago.
"We continue to aggressively pursue recovery for our investors throughout ongoing litigation and collection efforts both here and abroad," the spokesperson said in a statement.
(Reporting by Chris Prentice; editing by Jonathan Oatis and Paul Simao)
