The former CEO of an investment firm marketed as offering algorithmic trading strategies involving crypto futures contracts has pleaded guilty to running a cherry-picking scheme.
Peter Kambolin, the owner and CEO of Systematic Alpha Management LLC (SAM), pleads guilty to fraudulently allocating profits and losses from futures trades while serving as a commodity trading advisor and commodity pool operator between January 2019 and November 2021.
Cherry-picking is a fraudulent trading practice in which profitable trades are selectively allocated to certain accounts and unprofitable ones are allocated to others.
The U.S. Department of Justice says Kambolin made profitable trades on its own account while its clients bore the losses. The Florida-based Russian also alleged that SAM employed trading strategies focused on crypto futures contracts and currency futures contracts, despite the fact that about half of its trades involved stock index futures contracts.
The DOJ says Kambolin used the proceeds from the scheme to finance his personal expenses and make deposits into the foreign bank accounts controlled by his co-conspirators in Belarus and Dominica.
Says Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division:
“This plea demonstrates that the Department of Justice will not allow financial advisors to put their own interests ahead of clients, including by cherry-picking transactions.
It also underscores the Department of Justice’s commitment to using data analytics to prosecute misconduct in the financial markets.”
Kambolin has pleaded guilty to conspiracy to commit commodities fraud. He faces a prison sentence of up to five years.
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