Sillerman Settles With SEC For $179K On Fraud Charges, Given Permanent Ban

According to the SEC’s complaint, Sillerman’s Function(X) Inc. incurred significant losses during the first quarter of 2017, after which it raised capital with a public securities offering. 

Sillerman is alleged to have fraudulently diverted $500,000 of the $4.8 million raised to repay loans to Function(X), and then through a private securities offering enticed investors to pitch in by falsely claiming celebrities had invested in the company. The SEC further alleges that Sillerman created phony subscription documents, with forged signatures, purportedly from the two celebrities.

The SEC’s complaint against Sillerman, filed in U.S. District Court for the Southern District of New York, charges the mastermind behind the SFX concert promoter rollup of the ‘90s and 2000s with violations of the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder. 

Sillerman is also charged with violating the books and records and internal accounting control pro-visions of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder and aiding and abetting the company’s reporting violations under Section 13(a) and Rules 12b-20 and 13a-11 of the Exchange Act. 

The announcement says Sillerman has agreed to settle the SEC’s charges without admitting or denying the allegations, and agreed to a permanent director-and-officer bar and a penalty of $179,000. 

The settlement is subject to court approval.

Sillerman brought back SFX Entertainment with a focus on electronic music in the past decade, with apparent intentions of once again rolling up regional concert promoters into one entity, with SFX valued at more than $1 billion in 2013. He wasn’t as successful this time. 

It emerged from Chapter 11 bankruptcy in 2016, renamed LiveStyle and headed by former AEG Live CEO Randy Phillips. Now it counts electronic music properties such as  Made Event (New York’s Electric Zoo), React Presents (Chicago’s Spring Awakening), Disco Donnie Presents, Beatport, Life In Color and Los Angeles’ All My Friends.