An investment advisor from Fla. faces Fees from the Securities and Exchange Commission that he selected profitable trades for accounts of close relatives while causing other clients to suffer trading losses.
In addition to the charges filed, the SEC obtained an asset freeze and emergency relief against Ramiro Jose Sugranes and UCB Financial Advisers and UCB Financial Services Limited, the two companies he owned and operated. Overall, the SEC claimed that the system left Sugranes accounts with around $ 4.6 million in profitable trades while hitting other customers with more than $ 5 million in losses.
From September 2015 to when the SEC sought emergency relief earlier this month, the UCB companies worked with about 100 clients across the country. The two individuals who held the accounts designated by the SEC as “preferred” accounts were an elderly couple living in Leon, Nicaragua who shared the last name of Sugranes, which the commission said was the parents or close relatives of the Advisors were.
As of September 2015, Sugranes had allocated approximately 3,000 stock trades as part of a program to direct profits to specific accounts. In particular, the SEC found that preferred accounts were assigned more than 1,600 stock transactions, 95% of which were profitable. During the same period, more than 1,400 stock trades were allocated to non-preferred accounts, but only 32% made profits on the first day.
Similarly, Sugranes has allocated approximately 1,500 option trades during that time, with preferred accounts receiving profitable option awards 92% of the time, compared to non-preferred accounts where only 43% of options made gains on the first day. According to the Commission, the discrepancy between success and failure in the various accounts cannot be explained by trading in securities from different issuers or by luck.
“The likelihood that coincidence could explain this difference in first-day profits and losses between preferred and non-preferred accounts is less than one in a billion,” the lawsuit said.
According to the SEC, Sugranes would use a single account to place trades, but would not name the recipient of the securities when placing those trades. In the course of a day, if the price of a particular security rose, the advisor would close out that position and assign these trades to accounts allegedly held by his relatives, while if the price of the security fell during the trading day, these trades would be reassigned to other accounts, so the SEC. Over the course of the plan, of the $ 4.6 million deposited into preferred accounts, at least $ 2.24 million of those profits were deducted, presumably by Sugranes’ relatives (Sugranes was unavailable for comment at press time) .
On June 14, the SEC’s motion for emergency relief and an asset freeze was granted to halt the allegedly ongoing program. The commission is demanding permanent injunctions on Sugranes, as well as levies, prejudicial interest and civil penalties, and is also trying, according to the SEC, to reclaim the “unlawful profits” of Sugranes’ relatives who have benefited from the scheme.