Noah Myers waved his right to indictment and pleaded guilty to defrauding clients of over $2M. The investment adviser admitted to his involvement in a cherry picking scam. Myers, 43, owns MiddleCove Capital LLC, which is located in Connecticut. He faces up to 20 years behind bars and a maximum fine of $5 million.
As part of his guilty plea, Myers admitted to taking profits from investments for himself and other accounts he favored. Losses were distributed to accounts he did not favor. He accomplished this imbalanced distribution by waiting to assign a trade to an account until after he was able to determine whether it was profitable.
Because of his securities scam, clients lost over $2 million. Meantime, he made $460,000 in profits. A lot of the investors he bilked were retired and had asked MiddleCove to involve them in investments that were low risk.
Myers was the portfolio manager in charge of running client accounts. Charles Schwab & Co., Inc. (SCHW) was tasked with trading securities. As part of a trading deal with Schwab, Myers was allowed to use a master account to make block purchases and sell securities. He could then transfer these transactions to other accounts. During the day, he would disproportionately allocate the trades that appreciated to his personal and professional accounts. Trades that went down in value he would move to clients’ accounts.
It was MiddleCove’s employees who discovered the cherry picking scheme in 2010. They found out about the potentially illicit trades via a computer program that detects favorable allocations of day trades that are profitable.
Both the Federal Bureau of Investigation and the U.S. Securities and Exchange Commission have been investigating Myers for the past couple of years. The regulator has taken away MiddleCove’s investment adviser registration while Myers is now barred from the industry.
Contact our securities fraud lawyers today if you suspect your investments are because of financial fraud or negligence.
Connecticut Investment Adviser Admits Defrauding Clients Through Cherry-Picking Scheme, FBI, October 21, 2014
Read the SEC Order (PDF)
More Blog Post:
Alleged Cherry-Picking Scam Leads to SEC Charges Against California Hedge Fund Manager, Stockbroker Fraud Blog, December 18, 2012
73 Swiss Banks Want the US to Modify Proposed Tax Amnesty Deals, Institutional Investor Securities Blog, October 25, 2014
Wells Fargo to Pay $5M Over Inadequate Controls, Altered Documents, Institutional Investor Securities Blog, October 21, 2014