SEC bars Financial Sherpa head for cherry-picking trades

James L. Beyersdorf also will disgorge $232,000 and pay $189,000 in fines

Aug 21, 2019 @ 2:04 pm

By InvestmentNews

The Securities and Exchange Commission has barred James L. Beyersdorf, founder and sole owner of Financial Sherpa Inc., a state-registered investment adviser in Angels Camp, Calif., for cherry-picking options trades in client accounts and pocketing more than $232,000 in trading profits.

[More:SEC bars unregistered adviser attempting to serve professional athletes]

In a cease-and-desist order, the SEC said that from October 2017 through April 2018, Mr. Beyersdorf and has wife engaged in an undisclosed cherry-picking scheme by allocating profitable option trades to themselves and unprofitable option trades to client accounts. During that time, the SEC said that Mr. Beyersdorf also made false and misleading statements on his Form ADV, Part 2A filings.

The scheme ended in May 2018, when the broker-dealer that held the accounts of Mr. Beyersdorf's clients terminated its relationship with Financial Sherpa and the firm moved he accounts to another broker-dealer whose trading rules prevented cherry-picking.

[More: Does the SEC's new interpretation of the investment adviser standard diminish it? Depends who you ask]

The SEC ordered Mr. Beyersdorf to pay disgorgement of $232,166, prejudgment interest of $15,268, and a civil penalty of $189,427.

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