Gurpreet Chandhoke and Stephen Shea, Formerly of Arete Wealth Management, Respondents in Multi-Million FINRA Complaint

Finra complaint includes failure to disclose outside business activities, failure to disclose outside accounts, private securities transactions (PSTs), structuring of cash deposits, and making false statements.


Former Arete Wealth Management brokers Gurpreet Chandhoke (CRD#: 4999369) and Stephen F. Shea (CRD#: 3274649) have been named as respondents in a FINRA Enforcement Division complaint dated August 12, 2019, alleging five causes of action including: failure to disclose outside business activities, failure to disclose outside accounts, private securities transactions (PSTs), structuring of cash deposits, and making false statements.

Chandhoke and Shea have operated as partners as registered brokers, most recently with Arete Wealth Management (2016–2017) of Orinda, California; Penserra Securities (2015–2016) of Orinda, California, and Gordian Investments (2012–2014) also of Orinda, California.

First Cause of Action

Failure to Disclose Outside Business Activities

In the FINRA complaint, Shea and Chandhoke were named as respondents alleging they formed two entities together with the intent of engaging in non-securities business activities, and failing to provide prior written notice regarding those outside business activities to their member firms.

Some of Chandhoke and Shea’s activities allegedly included creating and distributing offering materials, soliciting investors, opening and maintaining a bank account on behalf of one entity, and making a down payment for a piece of real property.

According to FINRA records, Chandhoke later engaged in two additional non-securities business activities without providing prior written notice to his firms.

The complaint also alleges that contrary to their member firms’ written policies (WSPs), Chandhoke and Shea failed to disclose outside accounts opened at another FINRA member firm.

Second Cause of Action

Failure to Disclose Outside Accounts

Other Outside Business Activities

Relativity Media

Third Cause of Action

Private Securities Transactions

The complaint further alleges that Chandhoke and Shea participated in PSTs totaling $9,902,425 without providing written notice of those transactions to their firms prior to their participation.

AlesiaTec Series Seed PSTs

The VII Peaks BDC Investors PSTs

FINRA hearing records indicate Chandhoke participated in the VII Peaks BDC Investors transactions by, among other things, co-creating, managing and marketing the offering, and signing subscription agreements.

Records state Chandhoke and Shea failed to provide written notice to their member firm, Gordian, of the VII Peaks Investors BDC transactions.

Fourth Cause of Action

Structuring Cash Deposits

Fifth Cause of Action

False Statements

Relief Requested

Enforcement actions order that Chandhoke and Shea disgorge fully “any and all ill-gotten gains,” and make full and complete restitution, together with interest, and bear all attorney’s fees, in accordance with FINRA Rule 8330.

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