Flipping the Script! Advisor Skims Profits, Dumps Losses on Clients!

SEC v. James D. Burleson — U.S. Securities and Exchange Commission Litigation Release No. 26385, dated August 26, 2025.

The SEC charged James D. Burleson, the managing partner of an investment advisory firm, with a "cherry-picking" scheme. From August 2020 to October 2022, Burleson allegedly allocated profitable option trades to his personal account while assigning unprofitable trades to his clients. He consented to a final judgment permanently enjoining him from violating securities laws and agreed to pay over $2.2 million in disgorgement, interest, and penalties, along with a bar from the industry.

In Plain English

Imagine a person managing a shared investment account for themselves and their clients. This person unfairly gave all the winning trades to themselves and made sure the losing trades went to their clients. The SEC found out and stopped this unfair practice. The person agreed to pay back the money they unfairly gained, plus extra, and is now banned from managing investments.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Managing Client and Personal Trades James D. Burleson, as managing partner of Burleson & Company, LLC, handled investment trades for both his clients and himself. He utilized the firm's omnibus trading account, which allows for the aggregation of trades before allocation.
2. Identifying Profitable Opportunities During the period from August 2020 to October 2022, Burleson engaged in trading options, which can be volatile and offer opportunities for quick profits or losses.
3. The 'Cherry-Picking' Strategy Burleson implemented a scheme where he would identify trades that were likely to be profitable. He would then disproportionately allocate these winning trades to his personal trading account.
4. Shifting Unprofitable Trades Conversely, when trades resulted in losses, Burleson would disproportionately allocate these losing option trades to his clients' accounts.
5. Exploiting the Omnibus Account By using the omnibus trading account, Burleson had the ability to allocate trades after they were executed, allowing him to selectively assign the outcomes to different accounts based on whether they were profitable or not.
6. Direct Financial Gain This practice allowed Burleson to consistently benefit from the positive outcomes of option trading while his clients absorbed the negative results, directly enriching himself at their expense.

The Enforcement Action

On August 6, 2025, the SEC obtained a final judgment against James D. Burleson, the managing partner of Burleson & Company, LLC. The SEC had charged Burleson with a "cherry-picking" scheme where he allegedly allocated profitable option trades to his personal account and unprofitable ones to clients from August 2020 to October 2022. Burleson consented to a permanent injunction against violating securities laws, agreed to pay $1,837,700 in disgorgement, $216,590 in prejudgment interest, and a $230,464 civil penalty. He also settled an administrative proceeding, consenting to a bar from the securities industry with a right to apply for reentry after five years.

Named in this action: James D. Burleson.

Original SEC litigation release ↗ · Browse all cases