Late last month, the Securities and Exchange Commission filed a civil suit against Rehoboth Beach-based Bell Rock Capital, LLC, and its principal, M. Cassandra Toroian, for allegedly operating a multi-year “cherry-picking scheme.”
The SEC’s complaint alleges that from at least January 1, 2011, through December 31, 2015, Toroian traded securities in Bell Rock’s master trading account and delayed allocating the securities to specific client accounts until after she had observed the securities’ performance over the day.
Toroian denied the allegations and issued a lengthy statement to the Cape Gazette, vowing to fight the lawsuit until her name is cleared. Bell Rock is based in Rehoboth Beach and has offices in Florida, New Jersey, and the Philadelphia suburbs.
Click here to view the SEC filing.
She allegedly disproportionately allocated profitable trades to accounts that belonged to her and her family members and allocated less profitable and losing trades to client accounts.
According to the SEC’s complaint, the securities that Toroian allocated to accounts held by Toroian and her family members increased in value by more than 2%, or a gain of over $1 million, between the time Toroian purchased them and when she allocated them.
By contrast, the securities that Toroian allocated to her clients’ accounts decreased in value by -more than 1.3%, or a loss of over $1 million, between the time Toroian purchased them and when she allocated them.
The complaint further alleges that Bell Rock and Toroian misrepresented to clients that all trades would be allocated fairly and that Bell Rock and Toroian would not put their interests before their clients’ interests. The complaint also alleges that Bell Rock failed to implement policies and procedures designed to prevent Toroian’s cherry-picking.
The SEC seeks injunctive relief, disgorgement of Toroian’s gains with prejudgment interest, and civil penalties.
The SEC’s investigation was handled by its Philadelphia Regional Office.
