SEC charges 38 entities for false filings designed to lure retail investors

The Securities and Exchange Commission has filed charges against 38 entities it says submitted fraudulent registration forms to pose as legitimate US investment advisers. The goal, according to the SEC, was straightforward: exploit the credibility of official regulatory filings to win the trust of retail investors who had no reason to question a firm that appeared in the SEC’s own database.

The scheme behind the filings

The SEC’s complaints, initially filed on November 13, 2025, target a group of entities that submitted Forms ADV containing material misrepresentations. Among the six entities named in early civil actions were Bluesky Eagle Capital Management Ltd., Supreme Power Capital Management Ltd., AI Financial Education Foundation Ltd., AI Investment Education Foundation Ltd., Invesco Alpha Inc., and Adamant Stone Limited.

These firms claimed to have US offices in cities like New York and Denver. They reported assets under management ranging from $1M to $10M. They fabricated advisory roles and client relationships wholesale.

The broader investigation reveals these entities were not operating independently. According to the SEC, the scheme is linked to an alleged conspiracy orchestrated by Guanhua Su, a Hong Kong resident who was indicted around the same time. Su is accused of creating at least 10 shell companies between February 2023 and March 2025, all of which submitted fraudulent filings to the SEC.

The Department of Justice is running a parallel criminal case concerning securities fraud conspiracy, which means Su faces more than just civil penalties.

An 88% stock collapse and a classic pump-and-dump

One of the most visible consequences involved a public company whose stock price collapsed approximately 88% on April 17, 2024. The SEC has linked this crash to a promotional ramp-and-dump operation that targeted retail investors, a scheme that used the appearance of legitimate advisory relationships to pump up a stock before insiders dumped their positions.

The SEC’s complaints were filed in federal courts in New York and Colorado, alleging violations of Sections 204(a) and 207 of the Investment Advisers Act of 1940. Those provisions deal with filing requirements and the prohibition against making false statements in any registration document or report filed with the SEC.

Default judgments and $1.2M penalties

In April 2026, the court entered default judgments against Supreme Power Capital Management and AI Financial Education Foundation. Each entity was ordered to pay $1.2 million in civil penalties, along with permanent injunctions barring them from future violations.

What this means for investors and the advisory landscape

The case highlights a structural vulnerability in how the SEC’s registration system works. Form ADV is publicly searchable, and many investors use it as a first-pass credibility check before hiring an adviser. The SEC has long warned that appearing in its database does not mean the agency has vetted or approved an adviser’s business practices.

The 38 entities charged in this sweep represent one of the larger coordinated fraud actions the SEC has brought against fake advisory firms. The connection to a single alleged mastermind makes it unusual in scope: Su is accused of orchestrating the creation of at least 10 shell companies across a two-year period.

The parallel DOJ criminal case against Su will be the one to watch. Civil penalties and default judgments against shell companies recover some funds and create a public record. Criminal prosecution carries potential prison time, not just fines. Whether Su is ultimately extradited and tried will determine how much bite this enforcement action ultimately carries.

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