Advisor STOLE client profits! Cherry-picking REVEALED!

SEC v. Matthew J. Werthe — U.S. Securities and Exchange Commission Litigation Release No. 26497, dated March 6, 2026.

The SEC charged Matthew J. Werthe, dba HSR Wealth Management, with a "cherry-picking" scheme. Werthe allegedly used his firm's block trading account to unfairly allocate profitable trades to his personal account and losing trades to his clients. The court found Werthe liable and ordered him to pay over $1 million in disgorgement, interest, and penalties.

In Plain English

Imagine a person managing money for others, like a personal shopper for investments. This person had a special way to buy stocks for many clients at once. They would then decide which client got which stock from that big purchase. The problem was, they unfairly gave the winning stocks to themselves and the losing stocks to their clients. This is like a shopper always picking the best items for their own bag and leaving the less desirable ones for the people who hired them.

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. Establish Block Trading Account Matthew J. Werthe, operating as HSR Wealth Management, utilized a firm block trading account. This account allowed him to execute a single stock trade for multiple securities and then decide how to allocate portions of that trade among various client accounts he managed.
2. Disproportionately Allocate Profitable Trades From May 2021 to March 2022, Werthe engaged in a "cherry-picking" scheme. He would disproportionately allocate the profitable trades executed through the block trading account to his own personal account.
3. Shift Unprofitable Trades to Clients Concurrently, Werthe systematically allocated the unprofitable trades from the same block trades to the accounts of his clients, who had given him discretionary trading authority.
4. Violate Fiduciary Duties This practice directly violated Werthe's fiduciary duties to his clients, as he prioritized his own financial gain over their best interests.
5. Make Misrepresentations In addition to the cherry-picking, Werthe also made misrepresentations to his clients regarding his investment strategies and the management of their funds.
6. SEC Files Complaint The SEC filed a complaint against Matthew J. Werthe dba HSR Wealth Management on May 4, 2023, detailing these alleged fraudulent activities.
7. Court Grants Summary Judgment On March 12, 2025, the Court granted the SEC's motion for summary judgment, finding that Werthe had violated key provisions of federal securities laws, including Section 10(b) of the Exchange Act and Rule 10b-5, Section 17(a) of the Securities Act, and Sections 206(1) and 206(2) of the Investment Advisers Act.
8. Final Judgment Entered On February 2, 2026, the Court entered a final judgment against Werthe, granting the SEC's motion for monetary and injunctive relief.
9. Permanent Injunction Ordered Werthe was permanently enjoined from violating the charged provisions of the federal securities laws, prohibiting him from future misconduct in the securities industry.
10. Monetary Relief Ordered Werthe was ordered to pay disgorgement of $507,996.42, prejudgment interest of $112,340.03, and a civil penalty of $507,996.42, totaling over $1.1 million.

The Enforcement Action

SEC Obtains Final Judgment as to Investment Adviser in Cherry-Picking Scheme. On February 2, 2026, the United States District Court for the Southern District of California entered a final judgment as to Defendant Matthew J. Werthe, dba HSR Wealth Management, a formerly state-registered investment adviser. The SEC previously charged Werthe with engaging in a cherry-picking scheme, making misrepresentations to his clients, and violating his fiduciary duties. The SEC’s complaint, filed on May 4, 2023, alleged that from May 2021 to March 2022, Werthe used his firm’s block trading account to disproportionately allocate profitable trades to his personal account and unprofitable trades to his clients’ accounts. On March 12, 2025, the Court granted the SEC’s motion for summary judgment. On February 2, 2026, the Court granted the SEC’s motion for monetary and injunctive relief and entered a final judgment permanently enjoining Werthe from violating the charged provisions of the federal securities laws and ordering Werthe to pay disgorgement in the amount of $507,996.42, prejudgment interest in the amount of $112,340.03, and a civil penalty in the amount of $507,996.42.

Named in this action: Matthew J. Werthe.

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