The allegations read: The securities and exchange commission (the "commission"), for its complaint against jacobson, alleges that this matter arises from a cherry-picking scheme perpetrated by steven j. Jacobson ("jacobson"), a louisiana-based investment adviser representative ("iar"), and disclosure, compliance, and recordkeeping failures by his former firm, registered investment adviser advisor resource council ("arc"). From july 31, 2020 to october 1, 2020, jacobson disproportionately allocated option trades with positive returns between the time of the trade and the time of allocation ("first-day returns") to his personal account, to an account in name of his mother, marian jacobson ("marian"), and three other favored client accounts (collectively, the "favored accounts"), while disproportionately allocating option trades with negative first-day returns to other clients (the "disfavored accounts"). Jacobson and marian received ill-gotten gains of approximately $207,902 in excess first-day returns. Jacobson's scheme was halted when the custodian for the accounts he managed detected suspected cherry-picking by allocating trades to his clients according to performance and terminated his access to arc's block account. Arc failed to adopt and implement policies and procedures reasonably designed to prevent violations of the advisers act by the firm and its supervised persons. In particular, arc did not adequately monitor jacobson's trading activity and failed to implement the policies set forth in its compliance manual requiring that block trades be pre-allocated in writing and that all allocations be reviewed to ensure that no clients were disadvantaged. Arc's form adv part 2a (the firm's "brochure")-an investment adviser's primary disclosure document to its clients, which makes plain english disclosures about the adviser's business practices-contained statements that were false and misleading in light of jacobson's cherry-picking and the firm's compliance failures. Arc also failed to meet certain recordkeeping requirements. By engaging in a cherry-picking scheme, defendant jacobson violated section 10(b) of the securities exchange act of 1934 ("exchange act") and rules 10b-5(a) and (c) thereunder; section 17(a)(1) of the securities act of 1933 ("securities act"); and sections 206(1) and (2) of the investment advisers act of 1940 ("advisers act"). By its disclosure, compliance, and recordkeeping failures, defendant arc violated section 17(a)(2) of the securities act and sections 206(2), 206(4) and rule 206(4)-7 thereunder, and section 204(a) of the advisers act and rules 204-2(a)(7) and 204-2(a)(14) thereunder. The sec seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against jacobson and arc, and disgorgement of her ill-gotten gains from relief defendant marian.
