Carl Schwartz and RRBB Asset Management, LLC Charged by SEC with Conducting Cherry-Picking Scheme to Defraud Investors

Schwartz is the president, co-owner and managing member of RRB Asset Management.

The Sonn Law Group is investigating allegations that RRBB Asset Management, LLC and Carl Schwartz engaged in cherry-picking. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.

RRBB Asset Management, LLC, New Jersey-based asset management firm, and its president, Charles Schwartz, with operating a cherry-picking scheme that defrauded RRBB’s clients. 

The fraudulent act of cherry picking involves investment managers selecting specific profitable or unprofitable trades and allocating them in a manner of their choosing. For example, the investment manager might allocate the profitable trades to his own personal account or to certain clients in order to give them preferential treatment.

According to the SEC’s complaint, Schwartz traded securities in RRBB’s omnibus account and delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the day. He allegedly then allocated profitable trades to favored accounts and allocated less profitable trades and losing trades to RRBB’s other clients.

The complaint alleges that Schwartz disproportionally allocated unprofitable trades to six client accounts associated with two elderly widows, including a charitable foundation of which Schwartz is a trustee. The complaint further alleges that RRBB and Schwartz misrepresented to clients that all trades would be allocated in a fair and equitable manner.

The complaint charged RRBB and Schwartz with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. It also alleges, in the alternative, that Schwartz aided and abetted RRBB’s violations of Sections 206(1) and 206(2) of the Advisers Act.

Additionally, the complaint alleges that RRBB and Schwartz violated Section 207 of the Advisers Act and that RRBB violated, and Schwartz aided and abetted RRBB’s violation of, Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.

Contact Us Today

The Sonn Law Group is currently investigating allegations that RBB Asset Management, LLC and Carl Schwartz engaged in cherry-picking. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.