Title: Investment adviser charged with defrauding clients in cherry-picking scheme
The Securities and Exchange Commission filed a lawsuit in San Diego against Matthew J. Werthe. HSR Wealth Management is a San Diego investment adviser. Werthe is accused by the Securities and Exchange Commission (SEC) of defrauding and misleading his clients with a cherry picking scheme.
Werthe, according to SEC’s complaint engaged in fraudulent activities between May 2021 – March 2022. He is alleged to have used a “block trading account” designed for buying securities on behalf of multiple client accounts. Werthe, however, would place trades early in a day and then delay allocating the funds to his client’s accounts until later. In the complaint, Werthe is accused of unfairly allocating profitable trades for himself and assigning unprofitable ones to his clients. This resulted in an ill-gotten gain of at least $400,000. Werthe has also been accused of giving false and misleading information regarding his trading and that of clients, as well as the reasons for moving their accounts to a different broker-dealer.
The SEC filed a complaint in the U.S. District Court of Southern District of California accusing Werthe of violating several securities laws. These include the antifraud provision of the Securities Exchange Act of 1935 and the Investment Advisers Act of 1941. The SEC wants a permanent order, a conduct-based order, disgorgement and prejudgment interest as well civil penalties.
The investigation was conducted with the assistance of the Division of Economic and Risk Analysis, Los Angeles Regional Office. Daniel Lim, under Gary Leung’s supervision, will be leading the litigation.
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Securities and Exchange Commission, or SEC for short, is an American regulatory agency that has the primary responsibility of protecting investors and maintaining fair and effective markets. The SEC carries out its mission by a variety of actions and initiatives.
The SEC is responsible for enforcing federal securities laws. This includes overseeing registration and regulation of brokers, dealers and investment advisors. The SEC wants to prevent fraud and ensure transparency by requiring that these entities disclose important financial data and follow specific rules and regulations.
SEC plays a vital role in monitoring and investigating possible violations of securities laws. The SEC has the power to take enforcement action against companies or individuals who engage in insider trade, market manipulation, fraud accounting, or any other illegal activity. The SEC aims to create a level playing ground for investors by holding wrongdoers responsible.
The SEC also works to inform and educate investors about their rights. The SEC provides an array of resources to assist individuals in making informed investment decisions. These include educational materials, online tools and investor alerts. The SEC regulates the sale and offering of securities in order to protect investors and companies from fraud schemes.
Moreover, the SEC promotes fairness and efficient markets by monitoring the operation of self-regulatory organisations and securities exchanges. It examines proposed rule changes and monitors the market to prevent market manipulation, maintain fair trading and enhance market Integrity.
The Securities and Exchange Commission protects investors through the enforcement of securities laws, investigation of potential violations, education and promotion of fair and efficient markets. Its efforts are aimed at instilling confidence in financial systems and protecting investors from fraudulent practices.
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