SEC Charges Investment Adviser and Senior Officers with Defrauding Clients
Litigation Release No. 24278 / September 20, 2018
Securities and Exchange Commission v. World Tree Financial, LLC, et al., Civil Action No. 18-cv-1229 (W.D. Louisiana filed Sept. 18, 2018)
The Securities and Exchange Commission filed a complaint today in U.S. District Court for the W.D. Louisiana against Lafayette, Louisiana-based World Tree Financial, LLC and its majority-owner and co-founder, Wesley Kyle Perkins, for operating a cherry-picking scheme that defrauded World Tree clients.
The complaint alleges that for more than four years, Perkins reaped substantial profits at his clients' expense by cherry-picking trades. Perkins allegedly traded securities in World Tree's omnibus account and delayed allocating the securities to specific client accounts until he had observed the securities' performance over the course of the day. He then allocated profitable trades to favored accounts, like his own, while allocating unprofitable trades to two accounts with substantial assets controlled by one person. The complaint also alleges that World Tree and Perkins misrepresented to clients that all trades would be allocated fairly and equitably. In addition, it is alleged that World Tree, Perkins and Priscilla Gilmore Perkins, Perkins' wife and the firm's co-founder and co-owner, falsely represented that they were not trading in the same securities as World Tree's clients.
The SEC's complaint charges World Tree and Perkins with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. It also alleges that Gilmore violated the antifraud provisions Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder, Section 17(a)(2) of the Securities Act, and aided and abetted World Tree's and Perkins' violations of Sections 206(1) and 206(2) of the Advisers Act.
This is the sixth action arising out of an enforcement initiative to combat cherry-picking led by the SEC's Los Angeles Regional Office and supported by the agency's Division of Economic and Risk Analysis (DERA). The SEC's investigation was conducted by David Rosen and supervised by Robert Conrrad, with assistance from Scott Walster and Raymond Wolff in the Division of Economic and Risk Analysis. The litigation will be led by Gary Leung.