On October 12, 2023, Peter Kambolin, a former CEO of Systematic Alpha Management LLC (SAM), an investment firm, has recently admitted guilt in directing a deceptive “cherry-picking” scheme. This illegal activity involved misappropriating profitable trades for personal gain while burdening unsuspecting clients with significant losses.
Deceptive trading practices unveiled
From January 2019 to November 2021, he intentionally engaged in this unethical cherry-picking scheme as both a commodity trading advisor and commodity pool operator. His intentional manipulation of profits and losses unfairly benefited his personal accounts, resulting in damaging results for his clients.
The Department of Justice (DOJ) has revealed that Kambolin deceived clients by falsely claiming SAM primarily traded in crypto and forex futures but actually traded in equity index futures, defrauding investors worldwide. He used the gains for personal luxuries and sent money to co-conspirators in Belarus and Dominica.
Kambolin’s false claims regarding SAM’s trading activities
Nicole M. Argentieri, Acting Assistant Attorney General for the Justice Department’s Criminal Division, highlighted the breach of client trust for personal gain, damaging investor confidence in commodities markets. The Justice Department is committed to holding financial advisors accountable for self-interest, using data analytics to detect financial market misconduct.
Throughout the relevant period, Kambolin executed trades for SAM’s pool participants alongside trades for his proprietary accounts. This manipulative approach allowed him to selectively distribute profits and losses, prioritizing his own interests.
The significance of ensuring accountability for misleading and defrauding investors was highlighted by Shimon R. Richmond, the Assistant Inspector General for Investigations of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). The FDIC-OIG collaborates with law enforcement to safeguard investors and the nation’s banking system from individuals involved in such egregious financial crimes.
Having pleaded guilty to conspiracy to commit commodities fraud, Kambolin may face a maximum prison sentence of five years. The final sentence will be determined by a federal district court judge, considering the U.S. Sentencing Guidelines and other relevant statutory factors. The sentencing date is yet to be announced.