Experienced Trial Lawyer | Former Federal Prosecutor | White-Collar Defense for Individuals at McGovern Weems LLC
The WSJ's article over the weekend about the investigation of Ken Leech for "cherry picking" -- the practice of allocating profitable trades to one account and saddling another account with less profitable trades -- underscores a few critical points for DOJ enforcement: 1. DOJ now has the "big data" tools to investigate and charge these cases. 2024 shows these results: two financial advisors were respectively sentenced for "cherry-picking" schemes. In January, a commodity-trading advisor in Miami was sentenced for a "cherry- picking" scheme involving cryptocurrency futures. In September, an investment advisor in Connecticut was also sentenced for a similar scheme involving securities. As these cases show, these schemes cut across asset classes. 2. "Cherry-picking" cases are no longer solely SEC/CFTC actions. They are now frequently worked in parallel by DOJ and civil regulators. 3. These cases take a long time to investigate. DOJ and SEC/CFTC have improving tools to identify patterns in voluminous trade data. But doing so takes a lot of time. The data's complex nature also creates openings for defense arguments that the government's conclusions about the data are either unfair or wrong.