Steven J. Jacobson; Advisor Resource Council
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25874 / September 29, 2023
Securities and Exchange Commission v. Steven J. Jacobson and Advisor Resource Council, No. 2:23-cv-05650 (E.D. La. filed September 29, 2023)
SEC Charges Louisiana-Based Investment Adviser Representative with Cherry-Picking and His Former Firm with Compliance Failures
The SEC filed a complaint today in U.S. District Court for the Eastern District of Louisiana against New Orleans-based investment adviser representative Steven J. Jacobson for defrauding advisory clients through a cherry-picking scheme. The complaint also charges his former firm, Advisor Resource Council (“ARC”), with making false and misleading statements in its ADV brochures and failing to adopt policies and procedures to ensure fair and equitable trade allocations among ARC’s advisory clients.
According to the SEC’s complaint, from July 31 to October 1, 2020, Jacobson misused ARC’s block account to “cherry pick” profitable option trades for himself, his mother, and certain other favored accounts while allocating unprofitable trades to disfavored clients. Jacobson and his mother allegedly received more than $200,000 in illegal profits from the scheme. According to the complaint, Jacobson’s fraud was halted when the broker-dealer custodian for the accounts he managed detected suspected cherry-picking and terminated him from its platform. The complaint also alleges that ARC made false and misleading statements in its Forms ADV Part 2A, including by misrepresenting that its allocation procedures would be fair and equitable. ARC allegedly failed to adopt policies and procedures designed to prevent cherry-picking and failed to maintain certain required books and records.
The SEC’s complaint charges Jacobson with violating Section 17(a)(1) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. It also alleges that ARC violated Section 17(a)(2) of the Securities Act and Sections 206(2), 206(4), and 204(a) of the Advisers Act and Rules 206(4)-7, 204-2(a)(7), and 204-2(a)(14) thereunder. The complaint names Jacobson’s mother as a relief defendant.
The investigation was conducted by Colleen Keating and supervised by Robert Conrrad of the SEC’s Los Angeles Regional Office, with assistance from Raymond Wolff and Joshua Mallett in the Division of Economic and Risk Analysis. The litigation will be led by Lynn M. Dean.