(HedgeCo.Net) The Securities and Exchange Commission has obtained a final consent judgment against defendants Ramiro Jose Sugranes, Lina Maria Garcia, and two investment firms that the SEC had previously charged with an illegal cherry picking scheme, as well as a final consent judgment against relief defendants who received ill-gotten gains from the scheme.
According to the terms of the court-approved settlement, the defendants and relief defendants must pay approximately $5.7 million in monetary relief. In addition, in separate, settled administrative proceedings instituted on October 24, 2022, the SEC imposed an associational bar and suspensions against Sugranes and Garcia, respectively.
The SEC’s complaint was filed in federal district court in Miami, Florida on June 11, 2021, and its amended complaint was filed on November 15, 2021. According to the SEC’s amended complaint, Sugranes, through defendants UCB Financial Advisers, Inc. and UCB Financial Services, Limited (the “UCB Entities”), engaged in a cherry picking scheme to divert profitable trades to investment accounts held by Sugranes’s parents, who were named as relief defendants, and to saddle other clients with losing trades. According to the amended complaint, the scheme resulted in approximately $4.6 million in unlawful profits. The amended complaint further alleges that Garcia, the President and Chief Compliance Officer of UCB Financial Advisers, enabled the scheme by, among other things, sharing broker-dealer trading platform login information with Sugranes, which he used to carry out the cherry picking scheme.
Without admitting or denying the allegations of the amended complaint, Sugranes and the UCB Entities consented to entry of a final judgment permanently enjoining them from violations of the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) and Rules 10b-5(a) and (c) of the Securities Exchange Act of 1934, and Sections 206(1) and (2) of the Investment Advisers Act of 1940, ordering Sugranes to pay disgorgement of $4,600,000, partially on a joint and several basis with the other parties, with prejudgment interest, and a civil penalty of $500,000, and ordering each UCB Entity to pay a civil penalty of $250,000. Without admitting or denying the allegations of the amended complaint, Garcia consented to the entry of a final judgment permanently enjoining her from violations of the antifraud provisions of Section 17(a)(3) of the Securities Act and Section 206(2) of the Advisers Act and ordering her to pay disgorgement of $225,718, jointly and severally with Sugranes, along with prejudgment interest, and a civil penalty of $100,000. The relief defendants consented to a final judgment ordering them to pay disgorgement of $2,255,672, jointly and severally with Sugranes, along with prejudgment interest. Collectively, these final judgments resolve all of the SEC’s claims asserted in the district court litigation.
On October 24, 2022, the SEC instituted administrative proceedings barring Sugranes from association with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization, and suspending Garcia for a period of 12 months from associating with any such firm or from participating in any offering of penny stock and, for a period of three years, prohibiting her from acting in a supervisory capacity.