LAFAYETTE – The U.S. Securities and Exchange Commission has filed a complaint against a Louisiana financial adviser alleging that the company was involved in a "cherry picking" scheme, stealing millions from clients.
The SEC formally submitted the complaint on Sept. 18 to the U.S. District Court Western District of Louisiana Lafayette Division.
The SEC is requesting that World Tree Financial and Wesley Perkins "jointly and severally disgorge all funds received from their illegal conduct."
They are asking the courts to order World Tree, Perkins and his wife, Priscilla, "to jointly and severally disgorge all funds received from their illegal conduct; together with prejudgment interest thereon."
World Tree Financial and its two owners, Wesley and Priscilla Perkins, are alleged to have carried out the "cherry picking" scheme. According to court documents, "Cherry-picking” happens when the adviser gives himself or his favored clients the winning trades for that day, and allocates the losing trades to other clients."
The SEC alleges in its filing: "In doing so, they (World Tree Financial) breached the fiduciary duties they owed their clients – (Wesley) Perkins took profits for himself and others, while at the same time causing substantial losses for the disfavored client."
Perkins was World Tree’s chief executive officer and chief investment officer, and was responsible for all of the firm’s trading. In those roles, he was able to disproportionately allocate profitable securities trades to accounts that he and defendant Priscilla Gilmore Perkins owned and controlled, and to other accounts. She is Perkins’ wife and World Tree’s chief compliance officer.
The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all three defendants.
World Tree Financial was started in 2009. According to court documents, from March 2011 through September 2015, World Tree managed between approximately $40 million and $70 million in client assets.. World Tree assigned each client one of five “investment models” based on the size of the client’s account.
Under the scheme, World Tree is alleged to have, "allocated about 1,865 trades to the nine favored accounts" held by the Perkins, his wife or their businesses. Those trades earned a positive return of about 2.2%.
In contrast, court documents stated, "during that same period, the trades allocated to the Disfavored Client Accounts had negative returns. Perkins allocated about 2,239 trades to these accounts during this time. Those trades earned a negative return of about -1.05%."