The Securities and Exchange Commission announced today the entry of final judgments against Swapnil J. Rege and his company SwapStar Capital, LLC for engaging in a scheme to misappropriate assets from clients they advised.

The SEC's complaint, filed in federal court in the District of New Jersey on October 26, 2021, alleged that Rege and SwapStar solicited Rege's friends, neighbors, and other referrals to be the defendants' investment advisory clients. Rege and SwapStar allegedly misrepresented to clients that their money would be invested in securities for guaranteed returns. According to the SEC's complaint, Rege and SwapStar instead used client money to pay fictitious gains to other clients, return investment amounts to other clients, and pay for some of Rege's personal expenses. The complaint further alleged that Rege engaged in the alleged misconduct even after the SEC had barred him, in a 2019 SEC order, from associating with an investment adviser and ordered him to cease and desist from further violations of certain antifraud provisions in the Advisers Act. The complaint alleges that Rege acted as an investment adviser in violation of the bar against him and failed to disclose to his advisory clients that the SEC had barred him from associating with an investment adviser.

The complaint charged Rege and SwapStar with violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act, charged Rege with violating Section 203(f) of the Advisers Act, and asked the court to enforce the 2019 SEC order. The complaint requested injunctive relief, disgorgement of ill-gotten monetary gains plus interest, and penalties. The court entered a preliminary injunction, an asset freeze, and other emergency relief against the defendants and relief defendant on November 8, 2021.

The final judgments, entered by the district court on August 23, 2022, permanently restrain and enjoin Rege and SwapStar from violating the antifraud provisions of the Investment Advisers Act of 1940, and further order them to pay disgorgement of ill-gotten gains of over $4.8 million, plus pre-judgment interest thereon, and a penalty of $207,183, all on a joint and several basis. In addition, the final judgment against Rege permanently restrains and enjoins him from further violations of the 2019 SEC order, and requires him to pay an additional penalty of $207,183. The Court also entered a final judgment against Rege's wife, relief defendant Reema Rege, who received proceeds of the alleged fraud. Rege, SwapStar, and Reema Rege consented to the entry of the judgments against them.

The SEC's case was handled by staff of the SEC's Asset Management Unit and Boston Regional Office, including Martin Healey, Robert Baker, Naomi Sevilla, Michael Moran, and John McCann. The SEC acknowledges and appreciates the assistance of the Commodity Futures Trading Commission (CFTC) and the New Jersey Bureau of Securities. The CFTC filed a related action in CFTC v. Swapnil Rege and SwapStar Capital LLC, No. 21-cv-19337 (D.N.J. Oct. 26, 2021).