A former Delaware investment advisor who, along with her firm Bell Rock Capital, allegedly engaged in a multiyear cherry-picking scheme that benefited her and family members has agreed to a bar by the Securities and Exchange Commission.
Marguerite Cassandra Toroian, 51, of Broward County, Fla., without admitting to or denying the allegations of the complaint, submitted an offer of settlement to the SEC, which accused her of using the scheme to defraud clients while funneling illicit profits to accounts held by her and family members. She was a resident of Rehoboth Beach, Del., at the time of the complaint.
On November 16, Toroian and Bell Rock settled with the SEC, agreeing to pay disgorgement of $883,597, pre-judgement interest of $185,451 and combined civil penalties of $440,000.
Toroian could not be reached for comment.
When the SEC began its investigation into Toroian’s alleged violations, in July 2021, she responded on BrokerCheck, writing, “I categorically deny that I committed any violation of law or regulation and intend to vigorously dispute any allegations of wrongdoing.”
Also, when the SEC filed its complaint last March, she told Financial Advisor in a prepared statement that, “The SEC’s complaint may be long on words, but it lacks any real evidence to support its weak allegations.”
According to the SEC complaint, from at least January 2011 through December 2015, Toroian traded through Bell Rock’s master trading account to maximize her own short-term profits and to minimize her losses. “She bought securities through Bell Rock’s master account in the morning, saw how they performed throughout the day, and then disproportionately allocated securities that increased in value to herself and overwhelmingly allocated securities that decreased in value to her unwitting clients,” the complaint said.
The complaint said the securities that Toroian allocated from the master trading account to her personal and her family accounts increased in value by more than 2% – or more than $1 million – at the time she purchased them and before she allocated them. At the same time, the securities she allegedly allocated to client accounts dropped more than 1.3% – or more than $1 million – between the time of purchase and the time of allocation, the complaint said.
Toroian also made false and misleading claims to clients in Bell Rock’s Form ADV and other communications, the complaint said. For example, it noted that the firm’s brochure stated that Bell Rock (a) “and its associated persons will not put their interests before your interest”; and (b) “has a fiduciary duty to you to act in your best interest and always place your interests first and foremost.”
Those representations contradicted Toroian’s cherry picking, the complaint said, adding that both she and Bell Rock were reckless and negligent in not knowing “that Bell Rock’s Forms ADV were false and misleading when they claimed that the trading of securities would be allocated fairly and equitably among client accounts.”
Toroian began her career in 2002 with CBT Investment Management Inc. She founded Bell Rock Capital In 2006. The firm, during the relevant period, had between 100 and 200 investor clients, and between $175 million and $220 million in assets under management, the complaint said. A Form ADV, filed earlier this year, listed the AUM at nearly $193 million.