The Securities and Exchange Commission has charged Encinitas, California investment adviser Darren J. Caris and his firm, Caris Investment Partners, Inc., with running a cherry-picking scheme. The complaint says winning trades went to his personal account while certain clients absorbed the losers.
The civil case was filed October 6 in the U.S. District Court for the Southern District of California. The complaint also accuses the adviser of making false and misleading statements to the clients who trusted him with their money.
What happened in the Darren Caris case
According to the SEC litigation release announcing the charges, Caris used his firm’s block trading account to place trades between December 2023 and April 2024. Later in the same trading day, the complaint alleges, he disproportionately allocated profitable trades to his personal account and assigned unprofitable trades to certain client accounts.
The practice is known as cherry-picking. It lets an adviser watch how a trade performs during the day before deciding whose money actually owns it. Clients on the wrong side of that decision absorb losses the adviser never intended to share.
How the scheme stayed hidden
Block trading is the mechanic that makes the pattern possible. An adviser places one large order without naming an owner at the moment of execution. Allocation happens hours later, after results are visible.
The SEC says Caris exploited exactly that delay. His clients received the trades that went wrong, while his own account collected the trades that went right.
Timeline of the SEC action
The enforcement action moved from alleged misconduct to federal court in stages. The table below tracks the key dates.
| Date | Event |
|---|---|
| December 2023 | Alleged cherry-picking period begins |
| April 2024 | Alleged cherry-picking period ends |
| October 6, 2026 | SEC complaint filed in the Southern District of California |
| October 8, 2026 | SEC announces charges in Litigation Release No. 26669 |
| Ongoing | Civil litigation; no settlement has been announced |
What the SEC complaint alleges
The complaint accuses Caris and his firm of more than unfavorable trade allocation. It claims the two made false and misleading statements to clients and prospective clients. Those statements covered how trades were allocated, how conflicts of interest tied to Caris’s personal trading were managed, and the firm’s move to a different broker-dealer custodian.
Case number 26-civ-5714 names both the individual adviser and Caris Investment Partners, Inc. as defendants.
Charges and penalties the SEC is seeking
The complaint invokes the core antifraud provisions of federal securities law against Caris and his firm. The counts cite Section 17(a) of the Securities Act of 1933, along with Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They add Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
Those last two provisions apply specifically to investment advisers. They prohibit using deceit or fraud on clients and engaging in practices that operate as a fraud upon them. The SEC is asking the court for permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
Red flags investors should recognize
Cherry-picking leaves traces. Investors who review their statements with a critical eye can often spot the pattern before regulators do.
- Trade confirmations that arrive late or without a clear allocation method.
- Losses in your account that line up with gains reported by your adviser.
- An adviser who buys or sells the same securities held in your account.
- Vague answers when you ask how trades are assigned among clients.
What affected investors can do now
The SEC’s complaint contains allegations, and the defendants are presumed innocent unless the court finds otherwise. This case is headed to litigation rather than settlement.
Clients of Caris Investment Partners can take practical steps while it proceeds. Pull every account statement and trade confirmation from December 2023 through April 2024. Compare your fills against the prices and dates in question. Request the firm’s written allocation policies if they exist.
Investors who believe they were harmed may also want a securities attorney to review their options. Time limits govern certain recovery claims, and early documentation matters.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
Time matters in securities fraud cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
- Main Phone: 1-888-885-7162
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Offices in Florida, New York, Arizona, Texas, and North Carolina. Former Wall Street defense attorneys with 95+ years of combined experience. No recovery, no fee.
