Robert Magee and Valor Capital Asset Management Settle Fraudulent Cherry-Picking Scheme Charges
On March 8th the Securities and Exchange Commission announced settled charges against Robert Mark Magee, who is the principal, sole owner, and sole employee of Valor Capital Asset Management LLC, an Austin, Texas-based investment adviser for defrauding his clients through a “cherry-picking” scheme. Robert Mark Magee, who is the principal, sole owner, and sole employee of Valor Capital Asset Management agreed to be banned from the securities industry and pay more than $715,000 to resolve the SEC charges.
According to the SEC’s order, for almost three years, Magee traded securities in Valor’s omnibus account but waited to allocate the trades to client accounts until after the securities’ performance changed over the course of the day. Magee then “cherry-picked” the trades, disproportionately allocating profitable trades to his accounts and unprofitable trades to his clients’ accounts, reaping substantial profits for himself at his clients’ expense. The SEC’s order found that for most of the three-year period there was less than a one-in-a-trillion chance that the outsized performance of Magee’s personal account, compared to that of his clients’ accounts, was due to chance.
“This case echoes the several actions our office has brought in recent months aimed at protecting unsuspecting retail investors from investment advisers who allegedly cheat their clients by cherry-picking profitable trades,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “The settled order here finds that Magee and Valor cherry-picked trades to their clients’ detriment for almost three years.”
The SEC’s order found that Magee and Valor each violated antifraud provisions of the federal securities laws. Without admitting or denying the SEC’s findings, Magee and Valor agreed to the entry of a cease-and-desist order and to pay disgorgement, prejudgment interest, and civil penalties totaling $715,871.57. Magee also agreed to be barred from the securities industry.
This is the fourth 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 previous actions were announced on Sept. 12, 2017 and Feb. 21, 2018.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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