Cherry Picking Glenn Cap Advisory Gets Popped
The Securities and Exchange Commission (SEC) has announced that it has settled fraud charges against GlennCap LLC, an investment advisory firm based in Connecticut, and its owner, Jonathan Vincent Glenn. The charges revolve around a practice known as cherry-picking, where profitable securities trades were allocated to favored accounts, including GlennCap's own accounts and client accounts that paid higher fees for positive returns, while unprofitable trades were disproportionately allocated to disfavored clients.
According to the SEC's order, between at least January 2020 and March 2022, Jonathan Vincent Glenn engaged in block trading, allowing him to pool funds from multiple clients' accounts into trades. After determining whether a position increased or decreased in value, he allocated the more profitable trades to accounts that he favored. The SEC found that the probability of the favored accounts receiving the more profitable trades by chance was statistically nearly zero. The scheme resulted in Glenn and GlennCap receiving at least $2.7 million in profits.
Additionally, the SEC's order determined that Glenn made false and misleading statements about GlennCap's trading practices in documents provided to clients and prospective clients.
As a result of these actions, Glenn and GlennCap were found to have violated several securities laws, including Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
Both Glenn and GlennCap agreed, without admitting or denying the SEC's findings, to a cease-and-desist order. They are required to pay more than $3 million in civil penalties, disgorgement, and prejudgment interest as part of the settlement. This case highlights the SEC's commitment to identifying and addressing fraudulent practices in the financial industry to protect investor trust in the markets.
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SEC Charges Connecticut Advisory Firm GlennCap and its Owner with Cherry-Picking