The Securities and Exchange Commission has charged a St. Louis-based financial advisor with gaming the closing prices of thinly-traded securities to artificially boost the returns on client portfolios.

The agency alleges that Donald Koch, president and chief compliance officer of Koch Asset Management, engaged in a scheme to mark-the-close of thinly-traded securities by placing buy orders at prices well above the most recent previous trade shortly before the markets closed. This strategy aims to artificially impact the closing price of security.

The SEC says Koch, 64, instructed a trader at the broker-dealer Huntleigh Securities Corp., to make the trades to inflate the prices of securities held by his clients in an effort to improve the portfolio performance of their monthly account statements. Koch's firm manages separate accounts for roughly 40 clients with about $40 million in assets.

The alleged scheme took place during a three-month period between September and December 2009. As a result, the SEC alleges that Koch engaged in the fraudulent purchase or sale of securities, manipulated the account performance of clients, and violated rules requiring written policies and procedures, along with the maintenance of certain books and records.

A hearing of these charges will be scheduled before an administrative law judge. Koch, who has been registered with the SEC since 1992, couldn't be reached for comment.