Gurpreet Singh Chandhoke (also known as Gurprit Singh Chandhoke), of Orinda, California, a stockbroker formerly registered with Arete Wealth Management LLC, and owner of VII Peaks Capital LLC, has been suspended by Securities and Exchange Commission (SEC) for twelve months from being a stockbroker or investment adviser representative, and ordered to cease and desist from violating federal securities laws. In the Matter of Gurprit Chandhoke and VII Peaks Capital LLC. Case No. 3-20359 (June 4, 2021).

According to the Order, Chandhoke owned and co-managed VII Peaks Capital LLC. He and VII Peaks Capital were investment advisers of VII Peaks Co-Optivist Income BDC II. Between 2015 and 2017, there was a breach of fiduciary duty by Chandhoke and VII Peaks Capital to VII Peaks Co-Optivist Income BDC II.

The BDC’s Board of Directors was not made aware of transactions Chandhoke engaged in, which included his collection of $700,000.00 in due diligence fees relating to loans arranged between portfolio companies and the BDC. SEC states that VII Peaks Capital failed to identify that it was retaining the due diligence fees, and it did not receive any permission from the BDC’s Board of Directors to keep them. SEC found a conflict of interest in this situation because Chandhoke had a financial motive to cause VII Peaks Co-Optivist Income BDC II to make loans to portfolio companies.

The Order also states that two other transactions were executed by Chandhoke without him making the Board of Directors aware of the transactions. Chandhoke benefited financially, which showed a conflict with the BDC’s interests. In one case, $400,000.00 in technology services was provided by a portfolio company to a company that Chandhoke owned and operated. The transaction was solicited by Chandhoke. In another case, a $250,000.00 loan was received by Chandhoke from a company which the portfolio company’s CEO owned and operated. None of this was presented to the BDC’s Board of Directors. SEC did not authorize Chandhoke to engage in transactions with portfolio companies.

SEC found that Chandhoke violated Investment Advisers Act Sections 206(2) and 206(4) and Investment Company Act Section 57(a).

This is not the first time that Chandhoke was sanctioned by a regulator. He has been fined $50,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member for two years in any capacity supported by findings that he failed to disclose outside business activities and private securities transactions when he was associated with Arete Wealth Management, Penserra Securities LLC, and Gordian Investments LLC. Order Accepting Offer of Settlement, Disciplinary Proceeding No. 2015047244701 (November 4, 2020).

According to the Order, between 2014 and 2016, Chandhoke was engaging in outside business activities concerning AlesiaTec Inc., PFU LLC, Chandhoke Holdings LLC, and Relativity Media LLC, in violation of FINRA Rules 2010 and 3270.

Chandhoke failed to tell his employers about outside accounts, violating FINRA Rules 2010 and National Association of Securities Dealers (NASD) Rule 3050(c). And from March of 2014 to March of 2017, Chandhoke took part in $1,039,925.00 in private securities transactions while registered with Arete and Gordian. The transactions involved VII Peaks Investors BDC, AlesiaTec Series Seed interests, and AlesiaTec Series A interests. Chandhoke violated FINRA Rules 3280 and 2010 and NASD Rule 3040 for this reason.

Chandhoke was registered with Arete Wealth Management between May 18, 2016, and August 16, 2017.

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