HARTFORD, Conn. — A Greenwich investment advisor received a 21-month prison sentence Tuesday, followed by three years of supervised release, for defrauding clients through a “cherry-picking” securities scheme, according to a release from the U.S. Attorney for the District of Connecticut.
Jonathan Vincent Glenn, 55, defrauded more than 45 clients out of more than $2.7 million, according to prosecutors. He must also serve the first six months of his supervised release in home confinement, as was determined in Hartford federal court.
Prosecutors say that “cherry-picking” is an illegal securities trading practice where the responsible individual completes trades without assigning them to a specific trading account until it is determined if a trade is profitable or has suffered losses.
According to prosecutors, the responsible individual then allocates the profitable trades to favored accounts, which are often the individual’s own accounts, and gives unprofitable trades to client accounts they don’t favor.
Court documents and statements note that Glenn owned Glenn Capital LLC, also known as GlennCap LLC, which was an advisory firm headquartered in Greenwich.
Prosecutors say that through Glenn Capital, Glenn “provided clients with portfolio management services including asset selection and asset allocation.”
They add that Glenn managed all of Glenn Capital’s advisory clients’ accounts and was able to make trading decisions on behalf of each client without seeking approval first. Glenn reportedly placed trades on behalf of advisory clients, himself or family members by trading directly in the relevant individual account or by placing block trades in Glenn Capital’s omnibus account and allocating the block trades among the relevant individual accounts.
Prosecutors note that Glenn Capital’s Code of Ethics required Glenn to determine and document the specific allocation of each block trade before the execution and to allocate block trades to individual accounts at an average price.
Glenn defrauded clients by retroactively allocating profitable omnibus-account trades to favored clients, family and personal accounts and unprofitable omnibus-account trades to non-favored-client accounts, according to prosecutors.
“Notwithstanding the requirements set forth in the Code of Ethics, Glenn did not determine the allocation of block trades until after they were executed, when he knew if the trades were profitable in the hours following the execution,” prosecutors said.
Glenn generally realized the profits by selling the security when a block purchase of an equity security increased in value in the hours after being sold. Prosecutors say he then allocated those profits to favored-client, family, firm and personal accounts.
Additionally, prosecutors say that when a block purchase of an equity security decreased in value, Glenn generally allocated those blocked purchases to the non-favored-client accounts.
He reportedly failed to inform his clients that he was “cherry-picking” and instead gave the false impression that he allocated trades fairly and in accordance with a pre-determined allocation methodology.
Glenn pleaded guilty to securities fraud on Oct. 5, 2023. He is released on bond and will report to prison on Dec. 2.
The case was investigated by the Federal Bureau of Investigation with help from the U.S. Securities and Exchange Commission, which prosecutors say has settled fraud charges with Glenn and GlennCap LLC.
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Dalton Zbierski is a digital content producer and writer at FOX61 News. He can be reached at dzbierski@FOX61.com.
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