Fund structures leave investors tracing indirect stakes after the IPO
Ram Rupireddy invested $17,250 in a Late Stage Management fund in 2020 after sales manager Jeremy Barish told him the vehicle offered access to SpaceX shares. Late Stage was not selling the stock directly; it was offering stakes in vehicles that the firm said held shares.
SpaceX went public in June at a $1.77 trillion valuation. Shortly afterward, Rupireddy and three other investors who spoke with The Wall Street Journal said they could not log in to Late Stage’s investor portal.
Rupireddy said the firm later told him by email that it had sold the SpaceX shares in 2024, when they were worth around $105 each and before a 5-1 stock split. Late Stage said his holding was worth $45,450 at that time.
But Rupireddy said the portal showed in May 2026 that he held 500 shares, and his 2025 tax document also listed 500 shares before the split. He believed that represented 2,500 shares at the time of the IPO, which he estimated were worth more than $300,000 at the IPO price.
“The plan was to fund college education for both of my kids. One is a rising senior in high school,” said Rupireddy, who lives in Ashburn, Va., and has filed a complaint with the SEC.
The records reviewed by the Journal contained different dates for the reported sale. The portal initially listed Dec. 31, 2024. A later email said Late Stage had sent Rupireddy a notice on Sept. 23, 2024, indicating that the position had been sold.
That email also said the portal had been “incorrectly reporting since 2024” that Rupireddy still held the position and attributed the problem to a recent SEC investigation. It did not explain how the investigation affected the portal. Rupireddy said he searched his spam, junk and trash folders and found no notice of a sale. He also said he had received no proceeds.
An administrator at a New Jersey accounting firm that handled Late Stage’s tax forms told Rupireddy that the firm was conducting “a comprehensive review.” The message said more information was expected by late August. A later unsigned email from Late Stage’s operations address said the portal was under maintenance because an earlier fix had a glitch.
Rupireddy said a group chat involving about 150 Late Stage investors led him to believe more than 100 others faced similar concerns. Some investors have hired lawyers to file a complaint against Late Stage to recover and preserve their pre-IPO SpaceX shares.
One investor told the Journal that an SEC lawyer questioned him in July about his experience with Late Stage and that an FBI special agent was also on the call. An SEC spokesman said the agency does not comment on the existence or nonexistence of a possible investigation. The FBI declined to comment.
Late Stage did not respond to repeated requests for comment sent to its executives, lawyers representing the firm in a class-action lawsuit or the company’s main email address. The Journal also attempted to deliver questions to the New Jersey address listed as Late Stage’s office. A property manager said the company had moved out three years ago. Barish said he would respond to requests for comment but did not. Bartolata also did not respond.
SPVs allow investors to obtain indirect exposure to private companies. Some funds own company shares directly, while others invest in additional SPVs, creating multiple layers between an individual investor and the underlying stock. The funds are supposed to be limited to accredited investors, whose income or net worth reaches a specified threshold.
SPVs are not subject to the same regulatory oversight as mutual funds. They are not required to publicly report their holdings or investors, file audited financial statements or detailed income statements with the SEC, or obtain SEC approval before raising money.
The vehicles can charge placement or management fees of up to 5%, as well as performance fees of 20% or more. Investors generally expect the shares or cash to be distributed after an IPO, an acquisition or another liquidity event. SPVs can also keep investors’ money locked up until the underlying company’s shares become eligible for sale.
“Ultimately if you’re investing, you want to make sure you own what you think you own,” said Jared Fine, a partner in Davis Polk’s capital markets practice. “At the end of the day, like anything in life, it comes down to, do you trust your counterparty or with whom you’re doing business.”
Bankers estimate there are many SPVs tied to SpaceX stock. A first wave of pre-IPO investors is expected to become eligible to sell shares under lockup agreements Thursday, when around 900 million shares can be sold.
SpaceX shares fell more than 13% Wednesday after the company reported its first quarterly earnings as a public company. The stock was trading around $108, below its $135 IPO price. Investors who obtained shares before the IPO can still face lockup periods, fees and losses if the stock’s early trading is volatile.
Late Stage was founded in 2015 and marketed access to private technology companies before they went public. The firm advertised that it made money only after a company’s shares went public. Rupireddy said he expected the SpaceX shares to remain in the fund until after the IPO.
In March, Raymond John Pirrello Jr., Joseph Passalaqua and Robert Cassino, three Late Stage executives, pleaded guilty to charges of defrauding investors. Federal prosecutors said the executives lied to investors about hidden markups and fees. They are awaiting sentencing and face maximum prison terms ranging from 20 to 45 years. Passalaqua’s lawyer said the issue of the pre-IPO shares was not part of his case. The other executives’ lawyers did not immediately respond to a request for comment.
A separate class-action lawsuit alleges that Late Stage and Capital Truth added hidden markup fees for pre-IPO shares. Capital Truth, a private offshore investment firm based in the Bahamas, acquired part of an SPV that owned pre-IPO SpaceX shares and appears to have repackaged and sold those interests to Late Stage, according to court documents and lawyers. Capital Truth did not respond to requests for comment.
Rupireddy said he does not want to claim the $45,450 listed in his account because he believes he is owed more. He and other investors have asked a court to block any sale of the SpaceX shares because they fear a sale could limit their ability to recover the money they believe they are owed.
The concerns extend to SPVs linked to other expected IPOs. Anthropic, which is expected to launch its IPO this fall, updated a notice on its website in May saying it would not recognize sales of Anthropic stock that had not been approved by its board. The company identified online platforms that resell interests directly and indirectly through SPVs. At least two brokerages continued sending emails and text messages offering prospective investors access to Anthropic stock through SPVs.