The Securities and Exchange Commission has filed a civil complaint against Darren J. Caris and his firm, Caris Investment Partners Inc., alleging a cherry-picking scheme that diverted profitable trades to the advisor's personal account while saddling clients with losses. The complaint, filed October 6, 2026, in federal court, covers trading activity from December 2023 through April 2024.
According to the SEC, Caris, who is the firm's founder, sole owner, and only employee, used a block trading account to aggregate orders and then allocated trades after seeing whether prices moved in his favor. The regulator alleges that 95.8% of block trades allocated to Caris's personal account were profitable, compared with just 14.9% for client accounts. Over the period, the personal account gained approximately $158,458 in first-day profits, while 16 client accounts collectively lost about $143,754, across more than $44 million in total block trading.
The SEC's complaint includes a statistical analysis that puts the odds of such an allocation pattern occurring by chance at less than one in a million. The agency also cites a specific example from March 5, 2024, when Caris used the block account to buy 1,000 shares of Albemarle Corporation at about $112.09 per share and another 1,000 shares at about $106.70. The higher-priced shares were allocated to three client accounts, which lost more than $5,200 in paper value, while the lower-priced shares went to his personal account, which sold them the same day at about $109.85, locking in a profit of over $3,100.
The SEC alleges that Caris Investment Partners' Form ADV brochures, which are required regulatory disclosures, stated that the firm would not favor any account over another and that trades would be allocated at the average share price. The complaint claims these statements were false. The firm's disclosures also promised a written statement specifying allocation methodology before orders were placed, which the SEC says was not done.
The case came to light after a broker-dealer, identified in the complaint as Broker A, contacted Caris on or about April 4, 2024, expressing concerns about preferential block trade allocations made after trade outcomes were known. When asked for evidence that allocations were recorded before outcomes, Caris reportedly said he had none. The complaint alleges the pattern continued after that call.
On April 29, 2024, Broker A formally notified the firm that it was ending the relationship due to trading concerns. Caris then told clients in a May 1, 2024 email that he had decided to move platforms, citing poor customer service and trading errors at Broker A. The SEC alleges those reasons were false and that Broker A initiated the termination, setting a 90-day transition timeline without Caris's input.
Caris Investment Partners, based in Encinitas, California, has been registered as an investment advisor with California since September 2019 and with Hawaii since May 2025. As of 2025, the firm reported 64 clients and $54.6 million in regulatory assets under management. Caris, 55, has worked in the securities industry since 1993, including about 18 years at various broker-dealers.
The SEC is seeking a permanent industry ban for Caris, disgorgement of profits plus interest, and civil penalties. This case echoes other recent enforcement actions, such as the SEC's $3 million fine against former Western Asset bond manager Kenneth Leech for similar conduct. The regulator continues to prioritize cherry-picking cases, which undermine investor trust in fair allocation practices.
