SEC Charges Additional Investment Adviser in Cherry Picking Scheme
Litigation Release No. 25265 / November 15, 2021
Securities and Exchange Commission v. Ramiro Jose Sugranes, et al., No. 1:21-cv-22152 (S.D. Fla. filed June 10, 2021)
The Securities and Exchange Commission filed charges against Lina Maria Garcia of Miami-based UCB Financial Advisers, Inc. for her role in a multi-year "cherry picking" scheme in which millions of dollars were allegedly channeled to the accounts of preferred clients. The SEC previously announced related charges against UCB Financial Advisers, its affiliate UCB Financial Services, Limited, and Ramiro Jose Sugranes in June 2021.
The SEC's amended complaint, filed on November 15, 2021 in the United States District Court for the Southern District of Florida, alleges that Garcia, who is the president and chief compliance officer of UCB Financial Advisers, worked with the other defendants to divert profitable trades to two accounts held by Sugranes's parents, and to saddle other clients with losing trades. The defendants allegedly used a single account to place trades without specifying the intended recipients of the securities at the time they placed the trades. As alleged, after defendants established a position, if the price of the securities increased during the trading day, the defendants usually closed out the position and allocated those profitable trades to the two accounts held by Sugranes's parents, who have been charged as relief defendants. Conversely, the complaint alleges that if the price of the securities decreased during the trading day, the defendants usually allocated the unprofitable trades to other client accounts. The amended complaint further alleges that Garcia and Sugranes are romantic partners who have lived together for several years and that since at least 2018, Sugranes has provided Garcia with approximately $200,000 in cash and a half interest in an $800,000 investment in a local business.
The SEC's amended complaint charges Garcia with violating Sections 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and, in the alternative, with aiding and abetting the other defendants' violations of these provisions, and seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties.
The SEC's investigation was conducted by Jeffrey E. Oraker, Daniel M. Konosky, and Helena Engelhart Bean of the Market Abuse Unit and Denver Regional Office, with assistance from John Rymas of the Market Abuse Unit and Stuart Jackson and Joshua Mallet of the SEC's Division of Economic and Risk Analysis. The investigation was supervised by Danielle R. Voorhees and Joseph G. Sansone. The SEC's litigation is led by Christopher E. Martin and Mark L. Williams, under the supervision of Gregory A. Kasper.