In the Matter of Roger T. Denha
Admin. Proc. File No. 3-18649
In the Matter of BKS Advisors LLC
Admin. Proc. File No. 3-18648
On August 17, 2018, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Roger T. Denha (“Denha”). In the Order, the Commission found that, from at least January 2012 to November 2017, Denha, an investment adviser and investment adviser representative of BKS Advisors LLC (“BKS”), an investment adviser registered with the Commission and based in Southfield, Michigan, engaged in a fraudulent trade allocation, or “cherry-picking.” Denha executed his cherry-picking scheme by unfairly allocating purchases of securities between his favored accounts (including his personal and family accounts) and his other BKS clients’ accounts. Denha disproportionately allocated profitable trades to the favored accounts, and disproportionately allocated unprofitable trades to the accounts of certain advisory clients. He executed his scheme by buying the securities in an omnibus account and then waiting to allocate until after he had an opportunity to see whether the securities had increased in price.
Contemporaneously with the Order, the Commission instituted and simultaneously settled administrative and cease-and-desist against BKS (together with the Order, “Orders”).
In their respective Orders, Denha was ordered to pay a total of $616,618.00 in disgorgement, prejudgment interest, and a civil money penalty and BKS was ordered to pay a $75,000.00 civil money penalty. The funds were ordered to be combined into a Fair Fund, created pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalties, along with the disgorgement and prejudgment interest, could be distributed to those harmed by Denha and BKS’s conduct described in the Orders. See the Commission’s Orders: Release No. 34-83873 and IA-4987.
On September 20, 2018, the Commission issued an order appointing Miller Kaplan Arase LLP as the Tax Administrator for the Fair Fund. See the Commission’s Order: Release No. 34-84230.
On May 31, 2019, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-85997 and the Proposed Plan.
The Proposed Plan provides that the distribution of the Fair Fund shall be made to those investors harmed as a result of the Respondents’ fraudulent allocation or “cherry-picking” scheme and who suffered losses as calculated by the methodology described in paragraph 11 of the Proposed Plan.
For more information, please contact the Commission:
Office of Distributions