The U.S. Attorney’s Office (District of Connecticut) announced that it entered into a plea agreement with an owner/investment adviser representative of an investment adviser firm based in Connecticut. This CT investment adviser representative waived his right to be indicted and pled guilty to defrauding clients of $2.7 million through a cherry-picking scheme. Last month, the U.S. Securities and Exchange Commission (“SEC”) also issued a cease-and-desist order against this investment adviser representative and firm. This blog post will review the cherry-picking allegations and offer several best practices for a chief compliance officer (“CCO”) to detect such activity within his or her own investment adviser firm.
Tag Archives: PST
In general, an investment adviser firm’s code of ethics requires each access person within the firm to submit annually to the firm’s chief compliance officer (“CCO”) or other designee a report of the access person’s current personal securities holdings.
Request Supervised Persons Complete Annual Attestations
December 16, 2022
As compliance best practice and/or possibly a requirement under an investment adviser firm’s compliance manual, each supervised person of the firm should submit the following items to the firm’s chief compliance officer (“CCO”) or designee on an annual basis:
Investment Advisers Are Required to Maintain and Enforce P&P to Prevent Trading on Inside Information
February 15, 2021
Challenges Facing a CCO Supervising Against Insider Trading
SEC Charges Investment Adviser Rep with Cherry Picking Profitable Trades for Personal Account
October 12, 2020
On September 28, 2020, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint against an investment adviser representative located in Nebraska for allegedly cherry picking profitable trades for his personal investment account, while disproportionately assigning unprofitable trades to investment advisory client accounts. During the alleged scheme, which ran from January 2017 to March 2018, the SEC asserts that the investment adviser representative earned a 4.4% return on his personal investment account while his disfavored clients earned a negative 12.56% return. Click here to read the SEC’s complaint.
