Peter Kambolin, CEO of Systematic Alpha Management LLC (SAM), has been sentenced for a transnational “cherry-picking” scheme involving foreign exchange and cryptocurrency futures contracts. DOJ Press Release
Understanding the 'Cherry-Picking' Scheme
The term 'cherry-picking' in this context refers to a deceptive practice where a trader, in this case, Kambolin, unfairly allocates profitable trades to his own accounts while assigning unprofitable ones to his clients. This sort of manipulation not only can undermine the integrity of the financial markets but it also can result in significant losses for investors.
A Deeper Dive into the Case
Kambolin's operation, spanning from January 2019 to November 2021, allegedly involved a complex web of deceit. By masquerading SAM's trading strategies as focused on cryptocurrency futures and foreign exchange futures contracts, he misled investors. According to the DOJ, the reality was starkly different, with a substantial portion of trading involving equity index futures contracts. This misrepresentation played a pivotal role in the Defendant’s alleged defrauding of investors across the United States and abroad.
Kambolin's guilty plea to one count of conspiracy to commit commodities fraud. Kambolin was thereafter sentenced to serve a two-years impisonmnet to be followed by one and a half years of home confinement, and a forfeiture of approximately $1.6 million.