SEC Says Adit Ventures CEO Munson Robbed His Own Clients to Buy Pre-IPO Stock

Eric Munson ran Adit Ventures Management out of New York, steering client money into pre-IPO shares of companies like SpaceX and Klarna. The SEC says he lied to investors to get their money in, then used the funds to enrich himself and his affiliated general partners. [S1]

PROOF

The SEC filed a complaint against Munson, Adit Ventures Management LLC, and three affiliated general partners — Adit Ventures LLC, Adit Ventures II LLC, and Adit Ventures III LLC — for allegedly defrauding investors and client funds from at least April 2019 through December 2024. [S1] Munson is accused of soliciting an investor by falsely claiming that a fund owned shares of stock in a private, pre-IPO company. [S1] The complaint alleges the defendants regularly used client capital for their own benefit, including unsecured loans from the funds on favorable terms — loans that were not authorized by fund documents and generally not disclosed to investors. [S1] Filed in the Southern District of New York, the complaint alleges the defendants violated their fiduciary duties by buying pre-IPO shares themselves and then causing client funds to buy the same shares at a higher price, misrepresenting the true cost to investors and skipping the consent required for these principal transactions. [S1] The defendants are also accused of overcharging client funds millions in unauthorized "acquisition fees" and improperly pledging client assets as collateral for a $10 million line of credit, part of which was used to pay off the defendants' own obligations. [S1] Adit Ventures Management is separately accused of failing to register as an investment adviser at all. [S1] The complaint charges Munson, Adit Ventures Management, and the general partners with violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940, and charges Adit with violating the Advisers Act's registration provisions on top of that. [S1]

PUBLIC OPINION

Corey A. Schuster, Chief of the SEC Enforcement Division's Asset Management Unit, put it plainly: "Investment advisers are entrusted with acting in their clients' best interests. Here, the defendants allegedly engaged in repeated fraudulent acts to benefit or enrich themselves. That misconduct has no place in investment advisory relationships where clients count on investment advisers being their fiduciaries." [S1]

BULLSHIT DEFENSE

Munson and the other defendants did not admit to anything. "Without admitting the allegations in the complaint, the defendants consented to the entry of a judgment, subject to court approval, in which they agreed to be permanently enjoined from violating the charged provisions of federal securities laws, and agreed that the Court shall order them to pay disgorgement with prejudgment interest and a civil penalty in an amount to be determined by the court upon motion by the Commission." [S1] That is the standard neither-admit-nor-deny settlement, and it is not an exoneration — it is a deal. Munson also agreed to a forthcoming associational bar against him, with the right to apply for reentry after three years. [S1] Nobody who thought they'd done nothing wrong signs up for a three-year bar from the industry.

A fiduciary is supposed to work for the client. Munson worked for himself, and pledged the client's own assets to prove it.