Last week the SEC charged Advanced Equities and its co-founders Dwight Badger and Keith Daubenspeck with misleading investors on a pair of private placement offerings in 2009 and 2010. Or, put more bluntly, of lying.

The issuer – unidentified in SEC docs – was fuel cell company Bloom Energy, which in 2009 hired AE to lead a $150 million Series F offering at a $1.45 billion pre-money valuation ($18.52 per share). Only investors contributing more than $2 million would be able to communicate directly with Bloom, while those under that threshold would be reliant on AE for information.

According to the SEC, Badger told AE brokers in 2009 that “the energy company had more than $2 billion of order backlogs when the backlog never exceeded $42 million.” He also allegedly told them that Bloom “had a $1 billion order from a national grocery store chain even though the store only had placed a $2 million order and signed a non-binding letter of intent for future purchases,” and that it had been granted a $250 million DoE loan when it only had applied for a $96.8 million loan.

Daubenspeck allegedly did not correct Badger during the call, following which AE brokers disseminated the false data to prospective investors. Badger also gave the faulty info directly to investors in AE-sponsored pooled investment vehicles focused on the cleantech space.

The SEC says that Badger also led a deception effort the following year, when AE raised another $47 million for Bloom at the $1.45 billion valuation (including the inflated DoE loan information). Bloom, however, declined to accept the money and AE investors were made whole.

To be sure, this is pretty nasty stuff. And the SEC has gotten a settlement but, from my perspective, one that falls a bit short of the appropriate mark.

Under terms of the cease and desist agreement, AE will: (1) Pay a $1 million penalty, (2) Agree to be censured and (3) Hire an independent consultant to review its sales policies and procedures. Badger – who resigned from AE last month – will pay a $100,000 penalty and be barred for one year from associating with any securities firm. Daubenspeck agreed to pay a $50,000 penalty and a one-year supervisory suspension. None of the three were required to admitting or denying the SEC’s charges.

So where is the settlement insufficient? This one final requirement: AE must “Use its best efforts to locate purchasers for any of its customers who purchased the securities… in 2009 and who wish to sell their securities at a price equivalent to their original purchase price.”

My problem here is that AE is highly unlikely to find buyers for Bloom stock at $18.52 per share. According to SharesPost, the most recent contract came in at just $18.25 per share. Moreover, I’ve heard from multiple sources that Bloom was utterly unable to raise a $150 million funding round that it was seeking over the summer at $25.76 per share (via AE, of course).

If AE investors want out, shouldn’t AE be required to make up the difference? I have no idea how many investors this would apply to, but it seems odd that AE would pay a $1 million penalty to the SEC but nothing to the actual investors they arguably defrauded. And doesn’t Bloom have some responsibility in all of this, since it outsourced its fundraising to AE? And how about the VCs on Bloom’s board of directors, many of whom have used AE for other portfolio companies?

No response to requests for comment from either AE or Bloom, while the SEC declined to discuss the case beyond what was in the legal filings and press release. Worth noting, however, that Bloom’s voicemail system has an “investor relations” option (#3) for those who want “the opportunity to invest in Bloom Energy.”

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