SEC Says St. Louis RIA Manipulated Stock Prices ... To Boost His Clients' Returns

Tuesday, April 26, 2011 21:30
SEC Says St. Louis RIA Manipulated Stock Prices ... To Boost His Clients' Returns

Tags: fraud | sec

After all the recent cases of the SEC cracking down on traders manipulating micro-cap stocks for their own profit, along comes an advisor pushing prices on most of his clients' behalf.

This Website Is For Financial Professionals Only


Donald Koch of St. Louis allegedly colluded with his broker-dealer in order to inflate the closing price of several thinly traded stocks by buying well above market price.


As it happens, many of his roughly 40 clients were invested in those very stocks -- on Koch's advice. 


Each stock that surged 20% to 50% obviously made Koch look good. But instead of making any suspicious trades in his own name, he allegedly routed them through an elderly client's account, forcing her to absorb what would otherwise be considered atrocious execution.


What is most poignant about this story is that Koch is 64 himself and so should theoretically be ready to end his career on a high note. He had $40 million in AUM, which should have thrown off enough in management fees to keep just about anyone happy.


But his conversations with the trader who handled the orders were recorded via email and phone messaging, even though he himself destroyed internal records of the trades.


Tellingly, he acted as both president and chief compliance officer of his firm, Koch Asset Management. Wearing those particular hats together is like waving a red flag in front of the regulators, and so it was probably inevitable that the SEC now wants to shut him down.










Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.