Source: Securities and Exchange Commission
Litigation Release No. 24990 / December 21, 2020
Securities and Exchange Commission v. TH Wealth Management, LLC and Brian Keat Hobbs, ivil Action No. 3:20-cv-03676-C (N.D. Tex. filed December 18, 2020)
The Securities and Exchange Commission charged TH Wealth Management, LLC, a Dallas, Texas-based investment adviser, and Brian Keat Hobbs, its sole owner and principal, for conducting a cherry-picking scheme that defrauded four of their clients.
According to the SEC’s complaint, from at least December 2016 through March 2019, Hobbs placed options trades using TH Wealth’s omnibus trading account, which is intended to facilitate purchases of securities for multiple client accounts. As alleged, Hobbs placed the option trades early in the trading day but did not allocate the trades to specific clients or Hobbs’s personal accounts until the end of the day. The complaint alleges that Hobbs then disproportionately allocated profitable trades to his personal accounts and allocated the unprofitable trades to his clients’ accounts. As alleged in the complaint, Hobbs and TH Wealth also misrepresented to clients that all trades would be equitably allocated.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Texas, charges Hobbs and TH Wealth with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties.
The SEC’s investigation was conducted by the staff of the Los Angeles Regional Office, with assistance from Raymond Wolff and Rachita Gullapalli in the Division of Economic and Risk Analysis. The litigation will be led by Don Searles and supervised by Amy Longo.