Matthew “Matt” Werthe, operating under the name HSR Wealth Management in San Diego, California, spent roughly ten months running one of the most straightforward forms of investment fraud available to a registered adviser: he let the market decide which trades were profitable, then took the winners for himself and handed the losers to his clients. From May 2021 through March 2022, Werthe used a block trading account intended to serve multiple client portfolios to place trades early in the day, wait to see how prices moved, and allocate gains to his personal account while distributing losses across the accounts of the clients who trusted him with discretionary authority over their money.
The Securities and Exchange Commission charged him in May 2023. A federal court in San Diego granted summary judgment against him in March 2025 and entered a final judgment on February 2, 2026, ordering Werthe to pay a total of more than $1.1M, covering disgorgement, prejudgment interest, and a civil penalty equal to the full amount of his ill-gotten gains.
A Block Trading Account Designed for Client Benefit Was Used as a Personal Profit Filter
Block trading accounts exist to give investment advisers an efficient way to execute a single large trade and allocate portions of it across multiple client accounts simultaneously, ensuring all clients receive the same price. The structure is built on the assumption that an adviser with discretionary authority will act in the interests of the clients whose money he is managing. Werthe turned that structure into a tool for the opposite purpose.
According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of California, Werthe placed trades through the block account in the morning but deliberately delayed allocating those trades until later in the trading day. By waiting, he could observe whether a position had moved into profit or loss and then direct the results accordingly. Profitable trades went to Werthe. Unprofitable trades went to his clients. The scheme ran for nearly a year before it was detected, and the SEC estimated that Werthe derived at least $450,000 in ill-gotten gains from the practice.
He Also Lied to Clients About His Personal Trading and the Reasons He Moved Their Accounts
The cherry-picking scheme was not the only misconduct alleged against Werthe. The SEC’s complaint further charges that he made false and misleading statements to clients and prospective clients on multiple occasions. These misrepresentations covered his personal trading activity, his trading practices on behalf of clients, and the reasons he gave for moving client accounts to a new broker-dealer custodian.
The move to a new custodian is a detail that carries its own weight. Switching a client’s brokerage custodian is a significant administrative action that typically requires explanation and client consent. When an adviser provides false reasons for making such a move, it removes the client’s ability to make an informed decision about whether to follow the adviser’s recommendation. The SEC treats such misrepresentations as independent violations of the antifraud provisions of federal securities law, separate from and in addition to the trading misconduct itself.
The Court Granted Summary Judgment on Every Charge Without a Trial
On March 12, 2025, the court granted the SEC’s motion for summary judgment, finding that the factual record left no genuine dispute requiring a trial. The court found Werthe liable on all counts: violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The last two provisions are the core fiduciary duty requirements of the Investment Advisers Act and prohibit an adviser from engaging in any transaction, practice, or course of business that defrauds or deceives a client.
Summary judgment in an SEC enforcement case is not a routine outcome. It means the defendant failed to raise any material factual dispute that would give him a right to present his case to a jury. The court’s ruling reflected the strength and clarity of the trading data the SEC’s investigators had assembled, including the pattern of post-trade allocation decisions that consistently favored Werthe’s personal account over client accounts.
A Final Judgment of More Than $1.1M and a Permanent Bar from the Securities Industry
On February 2, 2026, the court entered a final judgment covering both injunctive and monetary relief. Werthe was permanently enjoined from violating any of the charged provisions of federal securities law, a bar that effectively ends his career as a registered investment adviser. On the financial side, the court ordered disgorgement of $507,996.42, representing the profits Werthe extracted from the scheme, plus prejudgment interest of $112,340.03. The court also imposed a civil penalty of $507,996.42, matching the disgorgement figure dollar for dollar. The total financial obligation under the judgment comes to $1,128,332.87.
The investigation was conducted by Kelly Bowers and supervised by Robert Conrrad of the SEC’s Los Angeles Regional Office. The litigation was handled by Daniel S. Lim under the supervision of Stephen Kam, also of the Los Angeles office.
Conclusion
The Werthe case is a reminder that cherry-picking schemes leave a clear statistical trail. When a single adviser consistently receives profitable allocations and his clients consistently receive losing ones from the same pool of block trades, the pattern is detectable, documentable, and ultimately indefensible in court. Werthe’s scheme ran for less than a year, but the judgment he now carries will follow him indefinitely. The $507,996 he extracted from clients became the baseline for both his disgorgement obligation and his civil penalty, and the permanent injunction closes off any return to the advisory business that made the fraud possible in the first place.
