Last Updated: November 20, 2021
INVESTORS: The SEC has alleged that president and chief compliance officer of Miami-based UCB, Lina Maria Garcia, has defrauded clients by funneling profitable trades to two accounts and diverted losing trades to other client accounts.
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What are the Specific Allegations Made Against Lina Maria Garcia in the SEC Complaint?
Below is the text from the SEC’s complaint regarding Lina Maria Garcia of Miami-based UCB Financial Advisers:
SUMMARY OF ALLEGATIONS
1. Defendant Sugranes, through UCB Advisers and UCB Services (collectively, the “UCB Entities”), engaged in a long-running fraudulent trade allocation scheme – commonly referred to as “cherry picking.” Defendants’ allocated thousands of profitable trades worth more than $4 million in stocks and options on securities (“Options”) to two preferred accounts held at the UCB Entities in the name of the Relief Defendants Ramiro Sugranes Hernandez and Thelma Lanzas De Sugranes, who are Sugranes’ parents or relatives (collectively, “Preferred Accounts”).
Sugranes also allocated millions of dollars of unprofitable trades to other investment advisory client accounts with the UCB Entities. This scheme is ongoing. The SEC brings this enforcement action to stop this fraud and return the ill-gotten gains to the harmed investors.
2. Sugranes perpetrated this fraud through UCB Services and UCB Advisers, an investment advisory firm of which he is a partial owner. He carries out the cherry-picking scheme by first using an average price trading account used by the UCB Entities to purchase stocks and Options on behalf of numerous client accounts. Sugranes then allocates those trades to specific accounts, typically later that same day. If the position increases in value during that day, the position is usually closed out, thereby locking in the same-day profit, and the opening and closing trades and the corresponding profits are allocated to one of the Preferred Accounts.
If the value of the trades decrease during that day, the position (which is worth less at the time of allocation than it was at the time of purchase and thereby has a first day loss) is usually allocated to the account(s) of one or more of the UCB Entities’ other clients (the “Non-Preferred Accounts”).
3. This cherry-picking scheme funneled approximately $4.6 million in illicit profits to the Preferred Accounts, and negatively impacted at least 75 Non-Preferred Accounts that suffered first day losses. In total, the Non-Preferred Accounts were allocated more than $5.5 million of first day losses with 16 of the Non-Preferred Accounts sustaining more than $25,000 in first day losses, and two other Non-Preferred Accounts sustaining more than $1 million in first day losses.
4. From this fraud, the Defendants received ill-gotten gains and benefits and the Relief Defendants received illicit proceeds from the Defendants’ fraud to which they have no legitimate claim.