SEC Charges Nebraska-Based Investment Adviser Representative for Conducting Fraudulent "Cherry-Picking" Scheme
Litigation Release No. 24925 / September 29, 2020
Securities and Exchange Commission v. Corbin L. Lambert, Civil Action No. 4:20-cv-03116 (D. Neb. filed September 28, 2020)
The Securities and Exchange Commission today charged Lincoln, Nebraska resident Corbin L. Lambert, the former CEO of Continuum Financial, LLC, a Nebraska-registered investment advisory firm, for conducting a cherry-picking scheme that defrauded his clients.
According to the SEC's complaint, from at least January 2017 through March 2018, Lambert placed options trades using Continuum Financial's omnibus account, which is intended to facilitate purchases of securities for multiple client accounts, and delayed allocating the securities to specific client accounts until he had observed the securities' performance over the course of the day. The complaint alleges that he then disproportionately cherry-picked the profitable trades to be allocated to his personal account and allocated the unprofitable trades to his clients' accounts. As alleged in the complaint, Lambert misrepresented to clients that all trades would be allocated in a fair and equitable manner. According to the complaint, Lambert concealed his misconduct from the other principals of Continuum Financial.
The SEC's complaint, filed in the U.S. District Court for the District of Nebraska, charges Lambert 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.
The SEC's investigation was conducted by Kathryn Wanner and supervised by Robert Conrrad, with assistance from Eugene Orlov and Raymond Wolff in the Division of Economic and Risk Analysis. The litigation will be led by Kathryn Wanner and supervised by Amy Longo.