SEC alleges Encinitas advisor cherry-picked profitable trades, caught purchasers with losses
95.8% of home trades had been winners. For purchasers? The SEC says simply 14.9%.
The SEC alleges an Encinitas advisor ran an alleged cherry-picking scheme that steered profitable trades to his account and losses to purchasers.
In a criticism filed October 6, 2026, the Securities and Exchange Commission charged Darren J. Caris and his agency, Caris Investment Partners Inc., with what the submitting calls a “cherry-picking” scheme carried out between December 2023 and April 2024. According to the criticism, Caris – the agency’s founder, sole proprietor, and solely worker – used a shared block buying and selling account to allocate worthwhile trades to his personal private account whereas directing unprofitable trades to 16 shopper accounts.
Block buying and selling, in plain phrases, means an advisor locations trades by a single pooled account after which decides afterward cut up them amongst particular person accounts. The criticism alleges Caris took benefit of that hole – ready to see which means costs moved earlier than deciding the place to ship every commerce.
The numbers within the SEC’s submitting are stark. According to the criticism, about 95.8% of block trades allotted to his private account had been worthwhile, in contrast with simply 14.9% of trades despatched to shopper accounts. Over the interval, the submitting says, the private account gained roughly $158,458 in first-day earnings whereas the 16 shopper accounts collectively misplaced roughly $143,754 – throughout greater than $44 million in complete block buying and selling.
A statistical evaluation cited within the criticism places the percentages of that sample occurring by probability at “lower than one in one million.”
The SEC walks by particular examples. On March 5, 2024, based on the submitting, Caris used the block account to purchase 1,000 shares of Albemarle Corporation at roughly $112.09 per share, then purchased one other 1,000 shares of the identical inventory at roughly $106.70. The criticism says the higher-priced shares had been allotted to a few shopper accounts, which collectively misplaced greater than $5,200 in paper worth. The lower-priced shares, the submitting alleges, went to his private account, which bought them the identical day at roughly $109.85 per share – locking in a revenue of greater than $3,100.
The agency’s personal disclosures informed a unique story, the SEC alleges. CIP’s Form ADV brochures – public-facing regulatory filings that funding advisors should present to purchasers – acknowledged: “We won’t favor any account over every other account.” The identical brochures acknowledged the agency would “put together a written assertion” specifying how trades could be allotted earlier than orders had been positioned, and that every account would “take part on the common share worth.” The SEC alleges all three statements had been false.
Then got here a key name. According to the submitting, a Broker A worker contacted Caris on or about April 4, 2024, and raised issues about “preferential block commerce allocation[s] . . . made after the result of the commerce is understood.” When requested for proof that allocations had been recorded earlier than commerce outcomes had been identified, Caris responded that he didn’t have any such proof, based on the criticism. The submitting says the sample of allocations continued after that decision.
When Broker A formally notified the agency by letter on April 29, 2024, that it was ending the connection as a result of “issues with buying and selling,” the criticism alleges Caris informed purchasers a unique model. In an electronic mail despatched May 1, 2024, he wrote: “After appreciable thought, I’ve determined to maneuver platforms.” He cited “an absence of ample customer support,” “late processing,” and “repeated buying and selling errors” at Broker A, based on the submitting. The SEC alleges none of these causes mirrored why the connection ended, and that Broker A – not Caris – set the 90-day transition timeline with none enter from the agency.
Caris Investment Partners is a California company primarily based in Encinitas. The criticism says the agency has been registered as an funding advisor with California since September 2019 and with Hawaii since May 2025, and had 64 purchasers and $54.6 million in regulatory belongings below administration as of 2025. Caris, 55, is described within the submitting as having labored within the securities trade since 1993, together with roughly 18 years at varied broker-dealers.
The SEC is in search of a courtroom order to completely ban Caris from the trade, power each defendants to return earnings plus curiosity, and impose civil penalties.
The allegations within the criticism haven’t been examined, and no courtroom has dominated on the deserves.
