The Securities and Exchange Commission (SEC) today charged Raymond J. DiMuro, a former principal of Your Source Financial, PLC, a formerly SEC-registered investment adviser based in Phoenix, Arizona, with defrauding clients by conducting a cherry-picking scheme.
According to the SEC’s complaint, from at least January 2018 to January 2022, DiMuro principally traded for Your Source clients by placing securities trades through a block trading account; block accounts facilitate purchases of securities for multiple client accounts.
As alleged by the SEC, however, DiMuro placed trades throughout the trading day but did not allocate portions of the block trades until later in the trading day, which allowed DiMuro to consider whether the traded security had gone up or down in price since the block trade had been executed in determining how to allocate the block trade.
The complaint alleges that DiMuro disproportionately allocated profitable trades to three favored clients and unprofitable trades to other Your Source clients.
According to the complaint, as a result of DiMuro’s cherry-picking, DiMuro’s favored clients received over $785,000 in day-of-trade profits and Your Source’s other clients suffered over $1 million in day-of-trade losses.
The SEC’s complaint, filed in the U.S. District Court for the District of Arizona, charges DiMuro with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c) thereunder, Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
Without admitting or denying the allegations, DiMuro consented to the entry of a final judgment, subject to court approval, permanently enjoining him from future violations of the charged provisions and imposing a $750,000 fine.
