Corporate Misconduct Accountability Project
Steve Susoeff, LLC (d/b/a Meritage Financial Group) · SEC Enforcement Action
Investment Adviser Rigged Trades to Enrich Girlfriend and Himself
SEC alleges Steven Susoeff systematically assigned winning trades to favored accounts while dumping losses on unsuspecting clients, causing over $144,000 in harm.
HIGH SEVERITY
TL;DR
Between January and July 2021, investment adviser Steven Susoeff allegedly used his control over client accounts to rig the allocation of stock trades. He waited until the end of each trading day to see which trades were profitable, then assigned the winners to his girlfriend, a business associate, and himself while dumping the losers onto other clients. This scheme generated over $90,000 for favored accounts and $54,000 for Susoeff personally, while causing more than $144,000 in losses for unsuspecting clients who trusted him with their savings.
This case shows how small advisory firms can exploit technical loopholes to systematically harm the very people they are supposed to protect.
$144,566
First-day losses imposed on disfavored clients
$90,334
Gains directed to favored accounts
$54,232
Profit Susoeff personally made from the scheme
89.9%
Profitable trades allocated to favored accounts
25.5%
Profitable trades allocated to disfavored clients
59
Total clients under management during the scheme
$8M
Assets under management at Meritage Financial
The Allegations: A Breakdown
Core Allegations
What they did · 8 points
| 01 | Susoeff placed block trades for multiple clients at once, then waited until the end of the trading day to allocate specific shares to individual accounts after he knew which trades were profitable. | high |
| 02 | He systematically assigned winning trades to his girlfriend’s account, a business associate’s account, and his own personal account while dumping losing trades onto other clients. | high |
| 03 | Favored accounts received profitable trades 89.9% of the time, while disfavored clients received profitable trades only 25.5% of the time, a disparity far beyond random chance. | high |
| 04 | The scheme ran for seven months from January 2021 through July 2021, during which Susoeff had full discretionary authority over approximately $8 million for 59 clients. | high |
| 05 | Susoeff served as both the firm’s principal and its chief compliance officer, meaning the person responsible for preventing misconduct was the same person committing it. | high |
| 06 | The broker sent Susoeff at least six separate warnings between December 2020 and July 2021 that trades must be allocated fairly and that cherry-picking was prohibited, but he continued the scheme. | high |
| 07 | On May 7, 2021, Susoeff executed multiple intraday trades in Apple stock within the block account, then allocated the profitable portions to favored accounts and the unprofitable portions to disfavored clients. | high |
| 08 | Disfavored clients suffered a net negative return of approximately -0.60% while favored accounts enjoyed a net positive return of approximately +0.61%, a statistically significant divergence. | medium |
Regulatory Failures
How oversight broke down · 6 points
| 01 | The broker sent repeated warnings to Susoeff on December 14, 2020, December 15, 2020, April 12, 2021, April 26, 2021, May 19, 2021, and July 13, 2021 about late allocations and the prohibition on cherry-picking, but took no immediate enforcement action to stop the conduct. | high |
| 02 | The block trading platform allowed Susoeff to delay allocations until after the market closed, creating a structural loophole that enabled him to see which trades were profitable before deciding which clients would receive them. | high |
| 03 | No independent compliance officer existed at the firm to provide oversight, as Susoeff himself held the role of chief compliance officer while simultaneously executing and allocating the trades. | high |
| 04 | Meritage Financial had written policies and procedures including a code of ethics that explicitly stated the firm owed fiduciary duties to clients, but these documents failed to prevent the systematic misconduct. | medium |
| 05 | The broker only removed Susoeff’s ability to use the block trading account in July 2021, after seven months of violations and six separate warnings had failed to stop the conduct. | high |
| 06 | Clients had no practical way to detect the manipulation from their account statements, as the losses appeared to be ordinary market fluctuations rather than systematically allocated losses. | medium |
Profit Over People
Personal enrichment at client expense · 6 points
| 01 | Susoeff personally profited by approximately $54,232 through the cherry-picking scheme, directing winning trades to his own account while his clients absorbed losses. | high |
| 02 | He used his position of trust and fiduciary authority to systematically favor his girlfriend’s account, enriching someone with whom he had a personal relationship at the direct expense of paying clients. | high |
| 03 | Susoeff also favored a business associate’s account, suggesting the scheme served to reward personal and professional relationships rather than maximize returns for all clients equally. | high |
| 04 | The firm collected asset-based management fees from all 59 clients even as Susoeff deliberately harmed the majority of them through manipulated trade allocations. | high |
| 05 | By allocating 89.9% profitable trades to favored accounts versus only 25.5% to disfavored clients, Susoeff created a two-tier system where proximity to him determined investment success rather than market performance. | high |
| 06 | The scheme demonstrates that Susoeff valued personal gain and favoritism over his legal and ethical obligation to treat all clients fairly and act in their best interests. | high |
Economic Fallout
The financial harm inflicted · 6 points
| 01 | Disfavored clients collectively suffered over $144,566 in first-day losses on trades that were systematically allocated to harm them. | high |
| 02 | These losses represent real harm to individuals who may have been saving for retirement, education, or other critical life goals and trusted Susoeff to act in their best interests. | high |
| 03 | The scheme transferred wealth from unsuspecting clients to favored insiders, generating over $90,334 in gains for the girlfriend and business associate at the direct expense of other clients. | high |
| 04 | Clients paid management fees to Meritage Financial for professional investment advice while simultaneously being systematically harmed through manipulated allocations. | medium |
| 05 | The -0.60% net negative return imposed on disfavored clients versus the +0.61% positive return for favored accounts represents a wealth transfer mechanism disguised as normal investment activity. | medium |
| 06 | Beyond direct financial losses, clients now face the uncertainty and cost of finding new advisers and the emotional toll of discovering their trusted fiduciary betrayed them. | medium |
Corporate Accountability Failures
Where checks and balances failed · 7 points
| 01 | Susoeff held the position of chief compliance officer at his own firm, creating an accountability structure where the person responsible for oversight was the same person committing fraud. | high |
| 02 | Meritage Financial maintained a written code of ethics and policies manual that explicitly prohibited the conduct Susoeff engaged in, showing that formal compliance documents alone cannot prevent misconduct. | high |
| 03 | The firm had no independent compliance function or outside oversight to detect or prevent systematic trade manipulation by its principal. | high |
| 04 | Despite receiving six separate warnings from the broker over seven months, Susoeff continued the scheme without any internal accountability mechanism stopping him. | high |
| 05 | The SEC filed its complaint on February 1, 2023, nearly two years after the misconduct began, illustrating the significant time lag between harm and accountability. | medium |
| 06 | No criminal charges are mentioned in the complaint, meaning Susoeff may face only civil penalties despite allegedly engaging in systematic fraud against his own clients. | medium |
| 07 | The small size of the firm meant fewer internal controls and checks, but also meant that a single individual could harm dozens of clients without immediate detection. | medium |
Community Impact
How trust was betrayed · 6 points
| 01 | The 59 clients who trusted Meritage Financial represented individuals and families relying on professional investment advice to build financial security for retirement, education, and other life goals. | high |
| 02 | Clients who suffered systematic losses may now face delayed retirement, reduced educational funding for children, or other life disruptions due to the financial harm inflicted by someone they trusted. | high |
| 03 | The betrayal of fiduciary duty erodes public trust in investment advisers generally, making it harder for honest financial professionals to serve their communities. | medium |
| 04 | Small investment advisory firms often serve local communities and build relationships based on personal trust, making this type of betrayal particularly damaging to community cohesion. | medium |
| 05 | The case demonstrates how even modest sums of money stolen from working families can have devastating impacts on household financial security and long-term planning. | medium |
| 06 | Victims may experience not only financial harm but also emotional distress, anxiety about their financial future, and loss of confidence in the financial system as a whole. | medium |
The Bottom Line
What this case reveals · 6 points
| 01 | This case illustrates how a single individual with discretionary authority and inadequate oversight can systematically harm dozens of clients over months while enriching himself and his inner circle. | high |
| 02 | The structural design of block trading platforms creates opportunities for manipulation when allocation timing is not strictly controlled and when advisers can see trade performance before making allocation decisions. | high |
| 03 | Formal compliance structures like codes of ethics and policies manuals are meaningless when the person responsible for enforcement is the same person committing the violations. | high |
| 04 | The broker’s six warnings over seven months demonstrate that awareness of potential wrongdoing does not automatically translate into timely intervention to protect victims. | high |
| 05 | Small advisory firms managing millions of dollars for dozens of families can operate with minimal independent oversight, creating conditions where systematic fraud can persist undetected. | medium |
| 06 | The case underscores the need for mandatory separation of compliance and trading functions, real-time allocation requirements, and independent audits to protect investors from cherry-picking schemes. | medium |
Timeline of Events
December 2020
Broker A sends first warnings to Susoeff on December 14 and 15 about late allocations and the requirement to treat clients fairly
January 2021
Cherry-picking scheme begins as Susoeff starts systematically allocating winning trades to favored accounts and losing trades to other clients
April 2021
Broker A sends additional warnings on April 12 and April 26 reminding Susoeff that cherry-picking is prohibited
May 2021
Susoeff executes multiple intraday Apple trades on May 7, allocating profitable portions to favored accounts and losses to disfavored clients; broker sends another warning on May 19
July 2021
Broker A sends final warning on July 13 and subsequently removes Susoeff’s ability to use the block trading account, ending the scheme
February 2023
SEC files complaint against Steven J. Susoeff and Steve Susoeff, LLC alleging systematic cherry-picking fraud
Direct Quotes from the Legal Record
QUOTE 1
The systematic nature of the scheme
allegations
“Of the trades allocated to the Favored Accounts, 89.9% were profitable on the day of allocation. By contrast, of the trades allocated to the Disfavored Clients, only 25.5% were profitable on the day of allocation.”
💡 This extreme disparity proves the allocation was not random but systematically manipulated to favor certain accounts.
QUOTE 2
The financial harm to victims
economic
“As a result of this cherry-picking scheme, the Disfavored Clients experienced over $144,000 in first-day losses, while the Favored Accounts experienced over $90,000 in first-day profits.”
💡 This quantifies the direct wealth transfer from unsuspecting clients to Susoeff’s favored insiders.
QUOTE 3
Susoeff’s personal enrichment
profit
“Susoeff personally profited by approximately $54,232 as a result of cherry-picking.”
💡 This shows Susoeff directly enriched himself at his own clients’ expense while serving as their fiduciary.
QUOTE 4
Broker warnings were ignored
regulatory
“On or about December 14, 2020, December 15, 2020, April 12, 2021, April 26, 2021, May 19, 2021, and July 13, 2021, Broker A sent Susoeff emails or messages reminding him that allocations must be fair and equitable to all clients.”
💡 Six separate warnings over seven months show that awareness of the problem did not stop the misconduct.
QUOTE 5
How the scheme worked
allegations
“After the close of trading on a given day and with full knowledge of whether a particular trade was profitable that day, Susoeff then allocated the profitable trades to certain accounts and the unprofitable trades to other accounts.”
💡 This describes the core mechanism by which Susoeff manipulated outcomes by waiting to see results before allocating trades.
QUOTE 6
Favored accounts identified
allegations
“The Favored Accounts included an account belonging to Susoeff’s girlfriend, an account belonging to a business associate, and Susoeff’s own personal account.”
💡 This reveals Susoeff used his authority to enrich his girlfriend and associates at other clients’ expense.
QUOTE 7
Breach of written policies
accountability
“Meritage’s policies and procedures manual and code of ethics stated that the Firm owed fiduciary duties to its clients, which included a duty of loyalty and a duty not to engage in any scheme or artifice to defraud.”
💡 Susoeff violated his firm’s own written ethical standards while serving as chief compliance officer.
QUOTE 8
Discretionary authority abused
allegations
“Susoeff had discretionary authority over client accounts and made decisions to buy and sell securities on clients’ behalf without their approval of each transaction.”
💡 Clients trusted Susoeff with full authority to act on their behalf, which he systematically abused.
QUOTE 9
Statistical impossibility of random allocation
economic
“The Favored Accounts had an overall net positive rate of return of approximately +0.61%, while the Disfavored Clients had an overall net negative rate of return of approximately -0.60%.”
💡 This consistent divergence in returns proves systematic manipulation rather than market forces or chance.
QUOTE 10
Example of intraday manipulation
allegations
“On May 7, 2021, within the Block Account, Susoeff purchased shares of Apple, Inc. in the morning, sold those shares in mid-morning, and then purchased shares again in early afternoon.”
💡 This specific example shows how Susoeff used multiple intraday trades to create profitable and unprofitable positions that he then selectively allocated.
QUOTE 11
Firm size and client base
allegations
“From January 2021 through July 2021, Meritage managed approximately $8 million for approximately 59 clients.”
💡 This shows the scheme affected a substantial number of ordinary investors who trusted a small advisory firm.
QUOTE 12
Dual role enabling fraud
accountability
“Susoeff served as Meritage’s Chief Compliance Officer.”
💡 The person responsible for preventing fraud was the same person committing it, eliminating internal accountability.
Frequently Asked Questions
What is cherry-picking in investment trading?
Cherry-picking is when an investment adviser places a large block trade for multiple clients, waits to see if it makes or loses money, then assigns the winning trades to favored accounts and the losing trades to other clients. This is illegal fraud that violates fiduciary duty.
How much money did clients lose in this scheme?
Disfavored clients suffered over $144,566 in first-day losses due to the systematic allocation of losing trades to their accounts. Meanwhile, favored accounts gained over $90,334 and Susoeff personally profited by approximately $54,232.
How long did this scheme continue?
The cherry-picking scheme ran for approximately seven months, from January 2021 through July 2021, when the broker finally removed Susoeff’s ability to use the block trading platform.
Who were the favored accounts that received the profitable trades?
The favored accounts included an account belonging to Susoeff’s girlfriend, an account belonging to a business associate, and Susoeff’s own personal account. These three accounts received profitable trades 89.9% of the time.
Did the broker know about the misconduct?
Yes. The broker sent Susoeff at least six separate warnings between December 2020 and July 2021 reminding him that allocations must be fair and equitable and that cherry-picking was prohibited. Despite these warnings, the misconduct continued for seven months.
Why didn’t clients notice what was happening?
Clients typically only see their account statements showing daily or monthly balances. The losses looked like normal market fluctuations rather than systematically allocated losses. Without access to the broker’s allocation records, clients had no practical way to detect the manipulation.
Who was supposed to be overseeing compliance at the firm?
Steven Susoeff himself served as the firm’s chief compliance officer, meaning the person responsible for preventing misconduct was the same person committing the fraud. This eliminated any meaningful internal oversight or accountability.
What is a block trading account and how was it misused?
A block trading account allows an adviser to place one large trade for multiple clients, which can reduce transaction costs. However, Susoeff misused it by waiting until the end of the trading day to allocate shares after he knew which trades were profitable, then assigning winners to favored accounts.
What charges is Susoeff facing?
The SEC complaint alleges violations of antifraud provisions and breach of fiduciary duty. The SEC is seeking disgorgement of ill-gotten gains, civil penalties, and permanent injunctions to prevent future violations. No criminal charges are mentioned in the complaint.
What can investors do to protect themselves from this type of fraud?
Investors should ask advisers how they allocate block trades, request detailed trade confirmations showing exact allocation times, verify that firms have independent compliance officers separate from trading personnel, check SEC records for any disciplinary history, and report suspicious patterns in account performance to regulators immediately.
Complaint PDF from the SEC’s website: https://www.sec.gov/files/litigation/complaints/2025/comp26239.pdf
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