The former CEO of an investment firm marketed as offering algorithmic trading strategies involving crypto futures contracts is pleading guilty to running a cherry-picking scheme.
Peter Kambolin, the owner and CEO of Systematic Alpha Management LLC (SAM), is pleading guilty to fraudulently allocating the profits and losses from futures trades when he functioned as a commodity trading advisor and a commodity pool operator between January 2019 and November 2021.
Cherry-picking is a fraudulent trading practice that involves selectively allocating profitable trades to certain accounts and assigning the unprofitable ones to others.
The US Department of Justice says Kambolin made profitable trades for his own accounts while his clients bore the losses. The Florida-based Russian national also claimed that SAM deployed trading strategies focused on crypto futures contracts and foreign exchange futures contracts despite the fact that about half of his trades involved equity index futures contracts.
The DOJ says Kambolin used the proceeds of the scheme to fund his personal expenses and make deposits to the foreign bank accounts controlled by his co-conspirators in Belarus and Dominica.
Says acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division,
“This plea demonstrates that the Justice Department will not allow financial advisors to place their self-interest ahead of clients, including by cherry-picking trades.
It also underscores the Justice Department’s commitment to using data analytics to prosecute wrongdoing in the financial markets.”
Kambolin has pleaded guilty to conspiracy to commit commodities fraud. He faces up to five years behind bars.
