The Securities and Exchange Commission (SEC) has recently brought serious allegations against GlennCap LLC and its sole owner and principal, Jonathan Vincent Glenn. The charges stem from undisclosed “cherry-picking” practices that occurred from January 2020 to March 2022, during which Glenn allegedly allocated profitable trades to favored accounts at the expense of other advisory clients. Haselkorn & Thibaut, a national investment fraud law firm, is currently investigating this case and is offering free consultations to clients who may have been affected.
Allegation’s Seriousness and Case Information
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The SEC’s allegations against GlennCap and Glenn are severe. The Commission accuses Glenn of executing block trades in GlennCap’s omnibus brokerage account, then waiting until later in the day to allocate the trades. This allowed him to see whether the positions had increased or decreased in value, and allocate profitable trades to favored accounts and less profitable ones to other client accounts.
Furthermore, GlennCap and Glenn are accused of making false and misleading statements about their trading practices in their Forms ADV, Part 2A (“Brochures”), which were provided to clients and prospective clients. As a result of these actions, the Respondents are accused of willfully violating several sections of the Securities Act, the Exchange Act, and the Advisers Act.
These allegations led to various sanctions, including an indefinite bar from association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO, a cease and desist order, and hefty monetary penalties totaling over $3.5 million.
Explanation in Simple Terms and the FINRA Rule
In simple terms, “cherry-picking” is a fraudulent practice where an advisor, in this case, Glenn, unfairly allocates profitable trades to certain accounts while burdening other accounts with less profitable or losing trades. This practice is not only unethical but also against the Financial Industry Regulatory Authority (FINRA) Rule 2111, which requires that a broker-dealer or associated person have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer.
The alleged actions of GlennCap and Glenn are a clear violation of this rule, as they prioritized their own interests over their clients’. This is a serious breach of the fiduciary duty that investment advisors owe to their clients.
Why It Matters for Investors
The allegations against GlennCap and Glenn highlight the potential risks that investors face when dealing with investment advisors. Investors entrust their hard-earned money to these professionals, expecting them to act in their best interests. When advisors engage in fraudulent practices like cherry-picking, they not only violate this trust but also potentially cause significant financial harm to their clients.
It is crucial for investors to understand that they have rights in these situations. If they have suffered losses due to the misconduct of an investment advisor, they may be able to recover these losses through FINRA Arbitration. Haselkorn & Thibaut, with over 50 years of experience and a 98% success rate, can assist investors in this process.
Red Flags for Financial Advisor Malpractice and How Investors Can Recover Losses
Investors should be aware of certain red flags that may indicate financial advisor malpractice. These include inconsistent performance, frequent and unnecessary trading, and lack of transparency in communication. If an advisor is not providing clear and timely information about trades and their rationale, it may be a sign of potential misconduct.
When malpractice occurs, investors can recover their losses through FINRA Arbitration. This process allows investors to seek compensation for their losses due to the misconduct of their investment advisor. Haselkorn & Thibaut specializes in this area of law and offers a “No Recovery, No Fee” policy, meaning they only get paid if they successfully recover losses for their clients. Investors can reach them at their toll-free consultation number, 1-800-856-3352.
In cases like the one against GlennCap and Glenn, it is crucial for investors to take action to protect their rights and recover their losses. With the help of experienced professionals like Haselkorn & Thibaut, investors can navigate the complexities of the legal process and seek the justice they deserve.
