SEC v. Darren J. Caris and Caris Investment Partners, Inc. — U.S. Securities and Exchange Commission Litigation Release No. 26669, dated October 8, 2026.
Named in the SEC’s action
- Darren J. Caris and Caris Investment Partners, Inc.
The SEC charged Darren J. Caris and his firm, Caris Investment Partners, Inc., with defrauding clients through a "cherry-picking" scheme. Caris allegedly allocated profitable trades to his personal account and unprofitable trades to client accounts between December 2023 and April 2024. The SEC seeks injunctions, disgorgement, prejudgment interest, and civil penalties.
In Plain English
Imagine you have a basket of apples, some are perfect and some have bruises. A person in charge of distributing them to you and themselves takes the perfect apples for themselves and gives you the bruised ones. This is what the SEC says Darren Caris did with investment trades. He allegedly took the winning trades for his own account and gave the losing trades to his clients.
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
- Setting up the Trade Darren Caris, through his firm Caris Investment Partners, Inc. (CIP), had the authority to make investment decisions for his clients' accounts. He would place trades for multiple securities in a single 'block trading account'.
- Observing Market Movement After placing the block trade, Caris would wait. During this time, he could observe how the prices of the securities in the block trade moved in the market.
- The 'Cherry-Picking' Allocation Once Caris saw the price movements, he would then decide how to allocate the trades among the various accounts. He allegedly did this well after the trades were initially placed.
- Profitable Trades to Himself Caris disproportionately allocated the trades that ended up being profitable to his own personal account, known as the 'Caris Account'.
- Unprofitable Trades to Clients Conversely, Caris allegedly allocated the trades that resulted in losses to some of his clients' accounts, referred to as the 'Client Accounts'.
- False and Misleading Statements To conceal his scheme, Caris and CIP allegedly made false and misleading statements to clients. They claimed that trades would be allocated fairly, without favoritism, and that written statements specifying allocations would be prepared beforehand.
- Lulling Clients About Broker Change Caris also allegedly misled clients about why their previous broker, 'Broker A,' stopped working with CIP. He reportedly downplayed Broker A's stated reason of 'concerns with [Caris’s] trading'.
- Financial Impact of the Scheme This cherry-picking scheme allegedly allowed Caris to gain approximately $158,458 in first-day profits for his personal account, while client accounts suffered approximately $143,754 in first-day losses.
- Statistical Unlikelihood of Chance The SEC noted that based on statistical analysis, the probability of Caris's allocation pattern resulting from random chance, rather than intentional conduct, is less than one in a million.
The Enforcement Action
SEC charges Darren J. Caris and Caris Investment Partners, Inc. for alleged fraudulent 'cherry-picking' scheme. Complaint filed in S.D. Cal. seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties.