The Securities and Exchange Commission, in a civil suit filed in federal court in Nevada, alleged Steven James Susoeff and his firm Meritage Financial Group of Henderson, Nevada defrauded clients through a cherry-picking scheme in which the firm purportedly traded securities but waited to allocate those trades to certain 'favored' accounts at the firm until a later time. The SEC alleged that Susoeff disproportionately allocated profitable trades to himself and two favored clients while allocating unprofitable trades to other customers, resulting in losses exceeding $144,000.
According to the SEC's complaint, investment adviser Steven J Susoeff (CRD #2885186) ran this fraudulent cherry-picking scheme in a block trading account, which is one outward-facing investment account that, internally within Meritage Financial, is actually comprised of multiple smaller customer accounts.
This block account format allowed Suseoff to effectively assign or distribute traded assets to a handful of client accounts that were participating in the block, as instead of distributing winning trades evenly to the different customer accounts that comprised the block, Susoeff purportedly funneled winning trades to certain favored accounts that he or his preferred clients controlled, while dumping the losing trades in the accounts of the other, non-favored, customers.
The SEC wrote that Susoeff began his fraud by disproportionately allocating winning trades to his girlfriend's account before ultimately including her, two business associates, and himself in his collection of "favored" accounts that would receive profitable trades.
Because not all trades are profitable, that meant that the losing trades had to go somewhere, and the findings indicate that Susoeff disproportionately allocated these losing trades to other clients' accounts.
Susoeff allegedly ignored warnings from one broker that what he was doing was prohibited and that his cherry-picking scheme violated securities industry rules.
In the end, Susoeff obtained more than $54,000 in ill-gotten gains for his own account and more than $90,000 in ill-gotten gains for his friend's and associates' accounts.
Meanwhile, clients who owned the disfavored accounts suffered more than $144,000 in losses due to the fraudulent cherry-picking scheme.
If you invested with the Nevada-based Meritage Financial Group, its owner Steven James Susoeff, or with any broker or investment adviser who improperly cherry-picked proceeds of block account trades into certain favored accounts, while dumping unprofitable trades into your account, resulting in disproportionate losses, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.