The head of a U.S. investment advisory firm — who allegedly engaged in a “cherry-picking” scheme — has been sanctioned in a settlement with the U.S. Securities and Exchange Commission (SEC).
In 2024, the SEC alleged that James Burleson — managing partner of California-based Burleson & Co. LLC — violated securities rules by using the firm’s omnibus trading account to improperly allocate profitable options trades to his personal account, while shifting a disproportionate share of losing trades to client accounts.
According to the SEC’s complaint, between August 2020 and October 2022, Burleson traded options through his firm’s block account, “which allowed him to execute trades for multiple clients and then subsequently allocate them to individual client accounts.”
The regulator alleged that he waited to see the outcome of those trades before allocating them, sending most of the profitable ones to his own account and leaving clients with more of the losses.
As a result, the SEC said his accounts received US$1.8 million in first-day profits, while clients suffered more than US$2.8 million in first-day losses.
On Monday, the SEC said Burleson consented to a final judgment requiring him to pay US$1.8 million in disgorgement, US$216,590 in prejudgment interest and a US$230,464 civil penalty.
He also agreed to a five-year ban from associating with any broker, dealer or investment adviser.