Ex-Investment Adviser CIO Accepts Industry Bar to Settle SEC "Cherry-Picking" Case

A former Chief Investment Officer of a registered investment adviser settled SEC fraud charges over a trade allocation scheme and accepted a bar from the securities industry.

A Southern District of New York court permanently enjoined him from violating the securities laws' antifraud provisions. The complaint alleged a "cherry-picking" scheme from at least January 2021 through October 2023. He allegedly waited hours to allocate trades, often near or after futures markets set daily settlement prices. He then allegedly gave trades with first-day gains to favored portfolios and trades with first-day losses to disfavored portfolios.

The injunction covers Securities Act Section 17(a) ("Fraudulent Interstate Transactions"), Exchange Act Section 10(b) ("Regulation of the Use of manipulative and deceptive devices") and Rule 10b-5 ("Employment of manipulative and deceptive devices"), and Advisers Act Sections 206(1) and 206(2) ("Prohibited transactions by investment advisers"). The SEC imposed the bar under Advisers Act Section 203(f) ("Registration of investment advisers").

The individual is barred from association with firms in the securities industry. He may apply to reenter through the appropriate self-regulatory organization. If none exists, he may apply to the SEC through its Division of Enforcement. He also pleaded guilty in June 2026 to obstruction of justice for false testimony during the SEC's investigation. 

The adviser settled in June 2026 for a $100 million penalty and a Fair Fund for investors in the disfavored portfolios.