SEC Brings Cherry-Picking Case Against an Investment Adviser

June 2, 2014

The SEC won a decision against Charles J. Dushek and Charles S. Dushekan, both from Illinois, for engaging in “cherry-picking.” The SEC had alleged that the Dusheks used their Lisle, Illinois-based investment advisory firm, CMA, to defraud CMA clients by conducting a “cherry-picking” scheme that garnered the Dusheks nearly $2 million in illicit profits. The SEC stated that the Dusheks placed millions of dollars in securities trades without designating in advance whether they were trading personal funds or client funds. They delayed allocating the trades so they could cherry pick winning trades for their personal accounts and dump losing trades on the accounts of unwitting clients at CMA. CMA also misrepresented the firm’s proprietary trading activities to clients.
The Dusheks must pay $2,058,514 in total disgorgement and $244,222 in prejudgment interest thereon, and each must pay a $150,000 civil penalty.

Click here to access the administrative order

 


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