Wealth manager Peter J. Eichler Jr., of Pacific Palisades, Calif., once had more than $10 billion in assets under management. Following his RIAs bankruptcy filing in November, however, the SEC has filed a lawsuit against Eichler and Aletheia Research and Management for alleged securities fraud and for allegedly violating fiduciary duties to clients and to the funds Aletheia managed. (The bankruptcy filing was posted in its entirety on Scribd by the New York Times' DealBook site.)
Eichler and funds run by his Santa Monica, Calif., firm reaped more than $4 million in fraudulent profits (including $2 million for Eichler himself) by using a cherry-picking options scheme, the SEC complaint alleges. The scheme allegedly allocated thousands of options trades more than an hour after their execution, sending winning ones to Eichlers personal account and to favored funds, and allocating losing trades to disfavored funds, the SEC claims.
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