SEC Obtains Final Judgment Against Investment Adviser Representative Donald Kellen

Litigation Release No. 25551 / October 6, 2022

Securities and Exchange Commission v. Donald J. Kellen, No. 2:20-cv-03861 (C.D. Cal. filed April 28, 2020)

On September 16, 2022, the Securities and Exchange Commission obtained a final judgment against defendant Donald Kellen, whom the SEC previously charged with conducting a multi-year cherry-picking scheme that defrauded his clients.

The SEC's complaint, filed April 28, 2020, alleged that, from about May 2012 through September 2015, Kellen profited at his clients' expense by cherry-picking profitable trades using an omnibus account, which is intended to facilitate purchases of securities for multiple client accounts.

Without admitting or denying the SEC's allegations, Kellen consented to entry of a final judgment permanently enjoining him from violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay disgorgement in the amount of $51,157, plus prejudgment interest thereon in the amount of $3,195, and a civil penalty in the amount of $25,648, for a total of $80,000.

On September 27, 2022, the SEC ordered in settled follow-on administrative proceedings pursuant to Section 203(f) of the Investment Advisers Act of 1940 that Kellen is barred from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.

The SEC's investigation was conducted by Nicholas Chung and Diana Tani of the Market Abuse Unit in the Los Angeles Regional Office, with assistance from Hugh Beck in the Market Abuse Unit's Analysis and Detection Center. Data analysis was performed by Drs. Carmen Taveras Alam, Rachita Gullapalli, and Erin Smith in the SEC's Division of Economic and Risk Analysis. The case was supervised by Joseph Sansone, Chief of the Market Abuse Unit. Daniel Blau, Lynn Dean, and Kathryn Wanner served as trial counsel.