Prime Group Holdings LLC, a Saratoga Springs, New York-based private equity firm focused on self-storage real estate investments, is distributing nearly $21.94 million to harmed investors following a Securities and Exchange Commission enforcement action centered on undisclosed brokerage fees tied to the firm’s CEO.
The distribution follows a September 2023 SEC settlement involving Prime Storage Fund II, LP, a self-storage investment fund that raised more than $500 million beginning in 2017. According to the SEC’s findings, a brokerage firm wholly owned by Prime Group CEO Robert J. Moser collected nearly $18 million in fees tied to fund property acquisitions between 2017 and 2021 without the arrangement being properly disclosed to investors.
Prime Group settled the matter without admitting or denying the SEC’s findings.
On May 1, 2026, the SEC approved the transfer of $21,941,064.97 from the Fair Fund established in the case to an escrow account at UMB Bank N.A. for distribution to eligible investors. The amount reflects the firm’s original $20,571,822 settlement plus accrued interest.
According to the SEC’s September 5, 2023 Order Instituting Administrative and Cease-and-Desist Proceedings and related enforcement materials, Prime Storage Fund II relied on a network of employees and independent contractors to source off-market self-storage acquisitions across North America. A 3% brokerage fee attached to many of those acquisitions was routed to a real estate brokerage firm owned entirely by Moser.
The SEC found that the brokerage constituted an affiliate under applicable securities law and that investors were not adequately informed of the arrangement.
The fund’s private placement memorandum disclosed a 1% acquisition fee and a 5% property management fee paid to affiliates, but omitted the separate 3% brokerage fee. The SEC additionally found that the fund’s offering materials characterized property sourcing as being handled internally.
The issue became more significant when prospective investors submitted customized due diligence questionnaires specifically asking whether brokers were being used and whether affiliated entities were receiving compensation.
According to the SEC, those investors were told no broker was involved and that sourcing was performed internally, responses the agency later determined were inaccurate.
The Commission charged Prime Group under Section 17(a)(2) of the Securities Act of 1933, a negligence-based antifraud provision that does not require proof of intentional misconduct. No individuals were charged as part of the settlement.
The affiliated brokerage fees were substantial. Between 2017 and 2021, the brokerage collected nearly $18 million tied to the majority of the fund’s acquisitions. Those fees existed on top of the separately disclosed acquisition and management fees already outlined in investor materials.
The SEC stated that conflicts involving payments to affiliates are material to investor decision-making and should have been disclosed clearly in the offering documents.
Prime Group ultimately agreed to pay $11,510,625 in disgorgement, $2,561,197 in prejudgment interest, and a $6.5 million civil penalty. The total settlement amount was deposited into a Fair Fund established under the Sarbanes-Oxley Act for the benefit of harmed investors.
The distribution plan itself was approved by the SEC in November 2024 after a public comment period that drew no objections.
The matter later drew additional attention after counsel for Prime Group challenged aspects of media coverage surrounding the case. In response, the publication involved defended its reporting as a fair summary and commentary on a public SEC enforcement proceeding grounded in the Commission’s own administrative order, press release, and Fair Fund distribution records.
The underlying SEC findings themselves, however, remain unchanged: regulators concluded that investors in Prime Storage Fund II were not fully informed that millions of dollars in brokerage fees tied to fund acquisitions were being routed to a firm wholly owned by the CEO of the investment manager overseeing the fund.
