Developing a computerized approach for high-speed trading through the use of a new algorithm might typically be the introduction to a new “spoofing” case brought by the CFTC or the DOJ. Where, however, it is the inducement for an investor to put up substantial amounts of capital for development which then disappears, it can also be the latest variation of an offering fraud. That is precisely the situation in U.S. v. Roberson, Case No. 7:18-cr-0011 (S.D.N.Y. Guilty plea May 10 2019).
Brian Roberson and his Partner met Investor in late 2010. Mr. Roberson controlled Savant Capital Management LLC at the time. He had a trading algorithm under development by a firm. Mr. Roberson told Investor and Partner that favorable terms could be secured at a securities Clearing Firm because the account he his firm, Savant Capital Management LLC, had a substantial balance.
In early 2011 Mr. Roberson suggested that Investor wire funds to Savant for trading with the algorithm which was under development. The funds would be deposited with Clearing Firm. The investor wired $250,000. While Mr. Roberson did deposit about $233,000 of the transferred capital to the account as represented, the balance was moved to others for his personal use.
By April Mr. Roberson stopped making payments to the vendor who was developing the trading algorithm. When Investor demanded the return of his funds, he only received $50,000. A substantial portion of Investor’s funds had been lost through trading. Other portions had been transferred to accounts for the benefit of Mr. Roberson and his family. The account with the broker was closed. The claim that it once had substantial balances was false.
Mr. Roberson was charged with securities fraud. On May 8, 2019 he pleaded guilty to one count of securities fraud. Sentencing is scheduled for August 26, 2019.
85th SEC Anniversary Gala: On June 3, 2019, the SEC Historical Society will host a gala celebration to commemorate the 85th Anniversary of the founding of the U.S. Securities and Exchange Commission and its 20th Anniversary. The event will be held at the Building Museum, Washington, D.C. Following a brief program featuring SEC Chairman Jay Clayton, there will be cocktails and dinner. For further information regarding tables, tickets and advertisements in the program please contact the Society here on or before May 17, 2019 (full disclosure Mr. Gorman is the President of the Society).