Noah L. Myers, 43, an investment advisor from Lyme, Conn., pleaded guilty in federal district court in Bridgeport to one count of securities fraud for operating a cherry-picking scheme that benefited him and hurt his clients, Deirdre M. Daly, United States Attorney for the District of Connecticut, announced.
According to court documents, Myers was able to buy block securities and not assign the securities to accounts until the end of the day. He put the highest-yielding transactions in his accounts and assigned lower or losing ones to clients, the U.S. Attorney says.
Myers was the owner of MiddleCove Capital LLC in Essex, Conn., and managed client accounts of approximately $129 million. MiddleCove used Charles Schwab & Co. Inc. to trade securities and as the custodian of the investments held in client accounts. As part of the trading arrangement with Schwab, Myers was permitted to place block purchases and sales of securities through a master account with Schwab.
Between April 2009 and November 2010, Myers engaged in cherry picking at MiddleCove by purchasing the leveraged exchange traded fund (ETF) ProShares UltraShort Financials, as well as other securities. At the end of the day he disproportionately allocated trades that had appreciated in value to his personal and business accounts and allocated trades that had depreciated in value to his clients’ accounts, the U.S. Attorney says.
“Noah Myers put his financial self-interest ahead of that of his clients,” says FBI Special Agent in Charge Patricia M. Ferrick. “This conduct undermines the confidence of the American public in our securities markets.”
Myers is scheduled to be sentenced in January.