Litigation Releases (Matthew J. Werthe, dba HSR Wealth Management)

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26497 / March 6, 2026

Securities and Exchange Commission v. Matthew J. Werthe dba HSR Wealth Management, No. 3:23-cv-815-L-DDL (S.D. Cal. filed May 4, 2023)

SEC Obtains Final Judgment as to Investment Adviser in Cherry-Picking Scheme

On February 2, 2026, the United States District Court for the Southern District of California entered a final judgment as to Defendant Matthew J. Werthe, dba HSR Wealth Management, a formerly state-registered investment adviser, whom the SEC previously charged with engaging in a cherry-picking scheme, making misrepresentations to his clients, and violating his fiduciary duties.

The SEC's complaint, filed on May 4, 2023 alleged that, from May 2021 to March 2022, Werthe used his firm's block trading account, which allowed him to place a single stock trade and later allocate portions of that stock trade among the various accounts over which he had discretionary trading authority, to disproportionately allocate profitable trades to his personal account and unprofitable trades to his clients' accounts.

On March 12, 2025, the Court granted the SEC's motion for summary judgment, finding that Werthe violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. On February 2, 2026, the Court granted the SEC's motion for monetary and injunctive relief and entered a final judgment permanently enjoining Werthe from violating the charged provisions of the federal securities laws and ordering Werthe to pay disgorgement in the amount of $507,996.42, prejudgment interest in the amount of $112,340.03, and a civil penalty in the amount of $507,996.42.

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 and supervised by Stephen Kam of the Los Angeles Regional Office.