Former Cetera Advisor Pleads Guilty To $6M Cherry

A former Cetera investment advisor rep has pled guilty to a cherry-picking scheme that netted him nearly $6 million at the expense of his clients, according to the U.S. Attorney’s Office for the Southern District of New York and the FBI. William David Carlton, 66, of Seattle, pled guilty yesterday to securities fraud and faces a maximum prison sentence of 20 years. He admitted to assigning profitable trades to his own accounts while assigning losing trades to his clients, in a scheme that cost clients approximately $6 million, the U.S. Attorney said. The scheme was carried out from January 2015 to August 2022. In a parallel civil suit filed against him by the SEC in 2024, the agency said Carlton held stocks in his personal account and, based on price movements in any given day, assigned the securities to either his own account in the case of good performers, or to his clients' accounts if the stocks were losers. "In short, by waiting and watching the price movements of the stocks he purchased in his personal accounts before deciding whether to keep the trades for himself or allocate the trades to his clients, he was able to 'cherry pick' trades that were immediately profitable for himself, to the detriment of his clients to whom he owed a fiduciary duty," the SEC said in its complaint. Only about 16% of the trades Carlton assigned to his clients’ accounts experienced same-day gains, prosecutors said, while only about 30% of the trades he assigned to his own accounts experienced same-day losses. "At the same time, approximately 84% of the trades Carlton assigned to his clients’ accounts experienced same-day losses," the U.S. Attorney's Office press release said. Carlton served as an investment advisor to more than 50 clients every year, the U.S. Attorney's Office said. Carlton was an investment adviser representative associated with First Allied Advisory Services from July 2012 to November 2020 and was with Cetera Investment Advisers from November 2020 until his termination in December 2023, according to the SEC complaint. Cetera reported that his termination was for "inappropriate trading practices," according to BrokerCheck. “William Carlton initially denied wrongdoing but later pled guilty to cherry picking profitable trades for himself and dumping poor performing trades on his clients,” FBI Assistant Director in Charge James C. Barnacle Jr. said in a statement. “Those clients trusted him to act in their best interest, and the FBI worked diligently to uncover his scheme and prevent further harm.”