SEC Obtains Final Consent Judgment Against Investment Adviser Stuart Frost

SEC Litigation Releases

Filed March 10th, 2026

Detected March 24th, 2026

Summary

The SEC has obtained a final consent judgment against Stuart Frost, an investment adviser to five private venture capital funds. Frost was charged with defrauding investors of over $14 million by charging undisclosed incubator fees. He has been permanently enjoined from violating antifraud provisions and ordered to pay a $150,000 civil penalty.

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What changed

The Securities and Exchange Commission (SEC) announced on March 24, 2026, that a final consent judgment has been entered against Stuart Frost in the U.S. District Court for the Central District of California. The judgment resolves charges filed in August 2019, alleging that Frost, as an investment adviser to five private venture capital funds, defrauded investors of over $14 million between 2012 and 2016. The fraud involved charging undisclosed and excessive incubator fees to start-up companies in which the funds invested, constituting a breach of his fiduciary duties.

The final judgment permanently enjoins Frost from violating specific antifraud provisions of the Investment Advisers Act of 1940 and its associated rules. Additionally, Frost has been ordered to pay a civil penalty of $150,000. This enforcement action serves as a reminder to investment advisers of their obligations to disclose all fees and act in accordance with their fiduciary duties to clients. Compliance officers should review internal policies and procedures related to fee disclosure and client fund management to ensure adherence to antifraud provisions.

What to do next

Review internal policies on fee disclosure for investment advisers.
Ensure all incubator and other fees charged to clients are fully disclosed and reasonable.
Verify adherence to fiduciary duties in all client interactions.

Penalties

$150,000 civil penalty

Source document (simplified)

Stuart Frost

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26505 / March 24, 2026

Securities and Exchange Commission v. Stuart Frost, No. 8:19-cv-01559-SPG-JDE (C.D. Cal. filed Aug. 13, 2019)

SEC Obtains Final Consent Judgment as to Investment Adviser to Five Private Venture Capital Funds

On March 10, 2026, the United States District Court for the Central District of California entered a final judgment as to Defendant Stuart Frost, whom the SEC previously charged with violations of the antifraud provisions of the Investment Advisers Act of 1940.

The SEC’s complaint, filed on August 13, 2019, alleged that from 2012 through 2016, Frost defrauded five private venture capital funds and the funds’ investors of over $14 million by charging undisclosed and excessive incubator fees to start-up companies in which the funds invested, in breach of his fiduciary duties to his clients.

Frost consented to the entry of a final judgment, which permanently enjoins him from violating Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, and orders him to pay a $150,000 civil penalty.

The SEC’s litigation was handled by Donald Searles and Charles Canter and supervised by Stephen Kam, all of the SEC’s Los Angeles Regional Office.