SEC Charges Darren Caris and Caris Investment Partners With Cherry-Picking Fraud
SEC sues Darren Caris and Caris Investment Partners over alleged cherry-picking that favored his account, seeking injunctions, disgorgement and penalties.
Summary
SEC Litigation Release No. 26669, published October 8, 2026, reports that the agency charged Darren J. Caris and Encinitas, California investment adviser Caris Investment Partners, Inc. in Securities and Exchange Commission v. Darren J. Caris and Caris Investment Partners, Inc., No. 26-civ-5714, filed October 6, 2026, in the U.S. District Court for the Southern District of California. From December 2023 through April 2024, Caris allegedly used the firm’s block trading account, then disproportionately assigned profitable trades to his personal account and losing trades to some client accounts later that day.
The complaint also alleges false or misleading statements to clients and prospects about trade allocation, conflicts involving Caris’s personal trading, and the firm’s move to another broker-dealer custodian. The SEC alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Investment Advisers Act Sections 206(1) and 206(2), seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties. Los Angeles Regional Office staff conducted the investigation under Robert Conrrad and Brent Wilner; Daniel Lim will lead the litigation under Stephen Kam.
Positives
- The SEC seeks disgorgement with prejudgment interest, which could return alleged gains if the court grants the requested relief.
- Permanent injunctions and civil penalties could restrict future misconduct and impose financial consequences if the allegations are proven.
- The complaint defines the alleged trading period as December 2023 through April 2024, giving the court a specific period to examine.
- Daniel Lim will lead the litigation under Stephen Kam after the Los Angeles Regional Office completed its investigation.
Risks & concerns
- Profitable block-account trades were allegedly allocated disproportionately to Caris, while losing trades went to some client accounts.
- Clients and prospects allegedly received misleading statements about trade allocation, personal-trading conflicts, and a broker-dealer custodian change.
- The SEC alleges violations across the Securities Act, Exchange Act, Rule 10b-5, and two Investment Advisers Act provisions.
- Permanent injunctions, disgorgement with prejudgment interest, and civil penalties create substantial legal and financial exposure for both defendants.