NEW YORK (CelebrityAccess) –The Securities and Exchange Commission has charged Robert F.X. Sillerman the former CEO of Function(x), Inc., with securities fraud, alleging he orchestrated an offering fraud and diverting offering proceeds to money he’d personally loaned the company.
According to the SEC’s complaint, Function(x), Inc., formerly an online publishing and entertainment business, incurred “significant losses” in the first quarter of 2017. In a bid to shore up the company’s finances, Function(x) completed a public securities offering in February 2017, which raised $4.8 million from investors.
The SEC alleges that Sillerman fraudulently took $500,000 of the proceeds raised in the offering to repay loans he had made to Function(x) and failed to obtain approval to use the money for that purpose.
The SEC also alleges that Sillerman, in a bid to raise additional money for Function(x) through private securities offerings, misled investors about the involvement of two unnamed celebrities, including with the use of forged documents and signatures of said celebrities.
As well, the SEC claims Sillerman made material misrepresentations about the offering, claiming it had raised $10 million which would be used for working capital and corporate expansion.
Sillerman has agreed to settle the SEC’s charges without admitting or denying the allegations in the complaint for a penalty of $179,000.
The terms of the settlement also permanently bar Sillerman from serving as director or officer of any publicly-traded company.
The enforcement actions follow an order issued last year revoking the registration of the securities of Function(x) for failing to comply with its obligation to file periodic reports with the Commission.