Cherry Picking Trades

compliance and cherry picking

A recent SEC action shows you exactly how to NOT allocate trades. The SEC brought charges against Howard Berger for not allocating trades until the end of the trading day.

Berger would routinely allocate the profitable trades to his wife’s account and the unprofitable trades to his private investment fund account. Since Berger would usually sell his positions at the end of the day, it was easy to see which trades worked and which ones lost money.

One trading platform seemed to be agnostic about allocations. When that trading platform went of business he switched to a second that better tracked the changes in allocations. That trading platform’s activity logs showed hundreds of instances where Berger switched allocations from the fund’s account to his wife’s account.

That’s a combination of theft and stupidity. he was blatantly stealing his client’s money and not bothering to notice the trail of breadcrumbs showing the theft.

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