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James C. Tao of Houston Texas is a stockbroker formerly employed with Sunbelt Securities Inc. who has been barred by Securities and Exchange Commission (SEC) from acting as an investment advisor or broker or associating with any investment advisory or brokerage firm in any capacity according to an Order Instituting Administrative Proceedings Making Findings and Imposing Remedial Sanctions containing findings that Tao facilitated unregistered private securities transactions. In the Matter of James C. Tao Administrative Proceeding File No. 3-18332 (Jan 8. 2018).

According to the Order, Tao was associated with James C. Tao between August of 2012 and March of 2016. Evidently, between January of 2013 and July of 2016, Tao solicited securities purchases from customers in his Texas-based company, Presido Venture Capital, LLC (PVC). Apparently, PVC was designed to be a private equity fund by which investors contributed money to invest in new and upcoming companies in the technology sector. SEC indicated that sales of PVC had been executed outside the auspices of Sunbelt Securities, where fifty percent of the investors in PVC were investment advisory customers of Tao.

Apparently, Tao was subject of a final judgment which enjoined Tao from violating Securities Exchange Act of 1934 Sections 10(b) and 15(a); SEC Rule 10b-5; Securities Act of 1933 Section 17(a); and Investment Advisors Act of 1940 Sections 206(1), 206(2), 206(4) and Rule 206(4)-9. Securities and Exchange Commission v. Tao et al., Civil Action No. 4:17-cv-03678 (S.D. Tex. Dec. 18, 2017).

SEC’s Complaint against Tao alleged that he was an unregistered broker when effecting the PVC securities. Moreover, he was alleged to have made misleading and false representations to customers to induce their PVC securities purchases; misappropriated the proceeds provided by the investors; omitted information about conflicts of interests and other facts in the course of making the PVC investment recommendations; and utilized Ponzi-scheme style tactics to accumulate the funds for investors when Tao would buy them out.

In particular, Tao falsely stated that investors’ funds would be placed into an escrow account and then returned to them in the event that $2,500,000.00 was not raised for PVC. Apparently, from 2013 to 2016, a total of $860,000.00 had been accumulated by Tao and his partner, Donna Chen. The Complaint alleged that Tao failed to inform the customers about his conflict of interest: he was personally invested in the very companies he recommended to investors.

Moreover, Tao reportedly utilized investors’ funds to procure a loan, where he would utilize that loan to acquire a greater interest in the PVC fund and pay expenses in a manner that was inconsistent with the intended use of the PVC funds as stated in the offering documents. Apparently, investors who complained were paid off by Tao in a Ponzi-scheme like approach, while restrictions on PVC fund redemptions had been disregarded by Tao to pay investors.

The Complaint alleged that Tao’s fraudulent activities were violative of Securities Exchange Act Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a), Investment Advisors Act Section 206 and Rule 206(4)-8. As part of settling the manner, Tao agreed to pay a $150,000.00 penalty and be disgorged of $155,970.67.

Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Tao was fired by Sunbelt Securities, Inc. on March 3, 2016 supported by accusations that he sold away from his firm and engaged in outside business activities without ever providing his firm with the requisite notification. Tao has been barred by FINRA in all capacities since August 29, 2016, founded on allegations that he failed to cooperate with FINRA’s requests for information. Case No. 2016049120001 (Aug. 29, 2016).

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