Jacko Law Group, PC
Call Today for a Consultation
San Diego 619-298-2880 San Francisco 415-766-3599 Los Angeles 213-631-2549

First "Cherry-Picking" Charges Arise From SEC's Data-Driven Initiative

The Securities and Exchange Commission ("SEC") has charged a Wisconsin-based investment advisory firm and its owner with "cherry-picking." Mark P. Welhouse of Welhouse and Associates, Inc. ("Welhouse") has been accused of placing more favorable trades in his personal and business accounts while allocating less favorable ones to his clients. This is the first case resulting from the SEC's data-driven initiative. The SEC's Enforcement Division analyzed large volumes of Welhouse's trade data and worked with economists in the Division of Economics and Risk Analysis to identify the alleged cherry-picking. Mr. Welhouse is accused of buying options in an S&P 500 exchange-traded fund called SPY in a master account and delaying trade allocation until later in the day so that he could evaluate which trades were profitable .  Welhouse is alleged to have disproportionately allocated the more favorable trades to his business and personal accounts while allocating trades that had depreciated in value to client accounts. According to the SEC Mr. Welhouse acquired $442,319 in ill-gotten gains through his scheme. "Cherry-picking schemes can be extremely difficult to detect without an investor astutely noticing that something may be amiss and coming to us with a complaint about the adviser," said Julie M. Riewe, Co-Chief of the SEC Enforcement Division's Asset Management Unit.  "We devised this initiative to identify specific custodians providing services to investment advisers and their clients and leverage their trading records and other data to efficiently target preferential trade allocations occurring outside the detection of even the most observant client." Please click here to read the entire SEC order instituting administrative proceedings against Welhouse and his firm. For more information on this and other related subjects, please contact us at [email protected] or (619) 298-2880.

No Comments

Leave a comment
Comment Information
Email Us For A Response

How Can We Help?

Email us to request more information or to schedule an appointment.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

San Diego Office
1350 Columbia Street
Suite 300
San Diego, CA 92101

Toll Free: 866-497-2298
Phone: 213-631-2549
Phone: 619-298-2880
Fax: 619-298-2882
Map & Directions

San Francisco Office
Four Embarcadero Center
Suite 1400
San Francisco, CA 94111

Phone: 213-631-2549
Phone: 415-766-3599
Fax: 619-298-2882
Map & Directions

Los Angeles Office
535 N. Brand Boulevard
Suite 270
Glendale, CA 91203

Phone: 213-631-2549
Fax: 619-298-2882
Map & Directions