* SEC says Advanced Equities, co-founders misled investors
* Advanced Equities to pay $1 mln; co-founders also fined
* SEC says firm hyped an unnamed Silicon Valley alternative
* Says firm overstated size of order backlogs, Energy Dept
* Unclear if unnamed company got a Dept of Energy loan
By Sarah N. Lynch
WASHINGTON, Sept 18 A Chicago-based investment
firm will pay $1 million to settle civil allegations that it
misled investors in private equity offerings about an
alternative energy company's finances and loan application to
the U.S. Department of Energy.
The Securities and Exchange Commission said that Advanced
Equities, Inc., and its co-founder Dwight Badger made
misstatements about a Silicon Valley-based alternative energy
company in private offering sales calls from 2009 and 2010.
The SEC also charged Advanced Equities' co-founder Keith
Daubenspeck for supervisory failings, saying he sat by silently
on internal sales calls after hearing Badger make misstatements
The company and both co-founders agreed to settle the SEC's
charges without admitting or denying the allegations.
In addition to the firm's $1 million penalty, Badger agreed
to pay a $100,000 penalty and be barred from the securities
industry for a year. He stepped down as the company's CEO
earlier this year.
Daubenspeck, who is still serving as chairman of the board,
agreed to pay a $50,000 penalty.
Attorneys for Advanced Equities and Badger could not be
reached for comment.
Steve Scholes, an attorney for Daubenspeck, said his client
is "very pleased that both he and Advanced Equities have this
matter finally resolved so that they can continue their efforts
to provide stellar business investment opportunities to their
The SEC alleges that Badger told investors the energy
company had more than $2 billion of order backlogs, but the
backlog actually never exceeded $42 million.
The SEC also said that Badger told investors the company had
been granted a loan from the U.S. Department of Energy for more
than $250 million, when in fact it had merely applied for a
$96.8 million loan.
"Dwight Badger misled investors by embellishing key facts
about the energy company's sales orders and its loan application
to the Department of Energy," said Merri Jo Gillette, the
director of the SEC's Chicago Regional Office.
"The SEC will continue to be vigilant in uncovering fraud in
private securities offerings and holding registered securities
The Energy Department's renewable energy loans and grants
have been the subject of political controversy over the past
year, particularly in the presidential elections. Republicans
have accused the Obama administration of using the loan program
to unfairly pick winners and losers in the private sector.
The SEC's complaint does not identify the name of the
alternative energy company in the private offerings, or indicate
if the company was ever actually awarded a Department of Energy
In June, however, Crain's Chicago Business reported that the
SEC's allegations pertain to the financial projections of a
Sunnydale, California-based fuel-cell maker called Bloom Energy
Corp., citing people familiar with the matter.
Attempts to reach anyone at Bloom Energy were unsuccessful.