Federal regulators, including the Securities and Exchange Commission (SEC) allege that hedge fund manager and chief executive of Aletheia Research and Management, Peter J. Eichler Jr., defrauded investors in a cherry-picking scheme.
According to the LA times, the SEC allege sthat Mr. Eichler allocated money-making trades to his personal account and passed off the less profitable trades to unfavored investors which resulted in $4.4 million in losses. The SEC allege that 98.3% of the trades Mr. Eichler transferred to his account were profitable, while only 31.7% of the trades distributed to the hedge fund were profitable. It is estimated that Mr. Eichler earned 19% returns totaling about $2 million in improper profits.
Aletheia Research and Management is a holding company and majority owner of their affiliate broker dealer Aletheia Securities.
Aletheia Securities is a California based broker dealer that was formed in 1997.
According to the LA times, “The allegedly improper trading occurred in options contracts, which give investors the right to buy or sell shares of a stock at a set price. Rather than specifying accounts at the time orders were placed, Eichler often waited more than an hour after making the transactions to designate which account they would go into, the SEC said. By then, the trades already were profitable or not.”
Additionally. Mr. Eichler failed to warn investors about the deteriorating financial condition of Aletheia until two days before the company filed for Chapter 11 bankruptcy.
According to BrokerCheck Report, the Financial Industry Regulatory Authority (FINRA), revoked Aletheia’s broker dealer licensed and expelled the company from FINRA membership in August of 2013.
As reported in the LA Times, three Aletheia’s investors have filed complaints with FINRA against Eichler and Aletheia for making “unsuitable” investments causing nearly $3 million in losses.
Brokers And financial advisers have a fiduciary duty to put the best interest of their clients above their own. In addition, brokers must perform adequate due diligence to determine that investment recommendations have a reasonable likelihood of success. When an investment adviser makes unsuitable investment recommendations they can be liable for investment losses through FINRA dispute resolution claim.
To determine if you may be able to file a FINRA claim against Aletheia, please call The White Law Group at (312)238-9650 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.