Noah L. Myers, Cherry-picking Scheme, Connecticut 2023

A Connecticut investment advisor has been sentenced to 40 months in federal prison for defrauding clients in a cherry-picking scheme.

Noah L. Myers, 43, of Lyme, Connecticut, was sentenced on [current date] by U.S. District Judge Stefan R. Underhill in Bridgeport, Connecticut.

Myers was the sole owner of MiddleCove Capital, LLC, a Connecticut limited liability company with its principal place of business in the Centerbrook section of Essex. MiddleCove had been registered with the U.S. Securities and Exchange Commission as an investment adviser since 2008, and Myers was the portfolio manager and managed a number of client accounts with assets of approximately $129 million.

Between April 2009 and November 2010, Myers engaged in cherry-picking at MiddleCove by purchasing the leveraged exchange traded fund (ETF) ProShares UltraShort Financials, otherwise known by its ticker symbol ‘SKF,’ as well as other securities. Myers then disproportionately allocated trades that had appreciated in value during the course of the day to his personal and business accounts and allocated trades that had depreciated in value during the day to the accounts of his advisory clients.

As a result, Myers gained as his clients suffered commensurate trading losses. For example, in August 2009, on the nine days when Myers purchased SKF in block trades in the master account and the security was sold as a day trade, Myers allocated between 9 percent and 32 percent of the profitable block trades to his personal accounts.

Myers was also ordered to perform 150 hours of community service. The scheme was uncovered by the FBI and the SEC, and Myers’ sentence serves as a warning to money managers who breach their clients’ trust in violation of federal securities laws.

Myers, a resident of Lyme, Connecticut, was the sole owner of MiddleCove Capital, LLC, a Connecticut limited liability company. The exact criminal charges against Myers were not specified in the press release, but the scheme involved defrauding clients in a cherry-picking scheme.

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