SEC v. STEVEN J. SUSOEFF; and STEVE SUSOEFF, LLC (dba Meritage Financial Group), No. 2:23-cv-00173, District of Nevada (Feb. 2, 2023) — Complaint

COMPLAINT
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DOUGLAS M. MILLER (Cal. Bar No. 240398)
Email:  [email protected]
KELLY C. BOWERS (Cal. Bar No. 164007)
Email:  [email protected]
Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Katharine Zoladz, Associate Regional Director
Gary Y, Leung, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
STEVEN J. SUSOEFF and STEVE
SUSOEFF, LLC (dba Meritage
Financial Group),
Defendants.
Case No.
CO
MPLAINT
P
laintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1.The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the
Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-
2:23-cv-173

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9(e)(1) & 90b-14.
2. Defendants have, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), and
Section 214 of the Advisers Act, 15 U.S.C. §§ 80b-14, because certain of the
transactions, acts, practices and courses of conduct constituting violations of the
federal securities laws occurred within this district.  In addition, venue is proper in
this district because Defendants Steven J. Susoeff (“Susoeff”) and Steve Susoeff,
LLC (dba Meritage Financial Group)  (“Meritage Financial”) reside in this district.
SUMMARY
4. This case is about a “cherry-picking” scheme carried out by Susoeff, an
investment adviser  representative, and by his investment adviser firm, Meritage
Financial, which Susoeff solely owned and controlled.
5. Between in or about January 2021 and July 2021, Meritage Financial
managed approximately $8 million for approximately 59 clients.  During this time,
Susoeff had discretionary authority over his clients’ accounts, meaning he had the
authority to make investment decisions and execute trades on his clients’ behalf.
Susoeff executed many of these trades through what is commonly called a “block
trading account,”   which allowed him to aggregate and execute trades for several
clients in  one account, and later allocate each trade to individual client accounts.
These aggregated trade allocations could be submitted to the brokerage firm at the
end of the trading day, so Susoeff had the opportunity to “cherry-pick” – that is, to
allocate the winning trades to some favored accounts, and to allocate the losing trades
to other disfavored accounts.
6. However, allocating trades in a way that favors some accounts over

COMPLAINT
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other disfavored accounts defrauds the disfavored clients and violates the fiduciary
duties that an investment adviser owes to them, including Susoeff’s duty of care and
duty of loyalty to his advisory clients.  Nevertheless, that is exactly what Susoeff and
Meritage Financial did in this case.
7. For approximately seven months, Susoeff and his advisory firm engaged
in a cherry-picking scheme.  It began with Susoeff disproportionately allocating
winning trades to an account of his girlfriend (ending in 9566), whose initials are
H.E., and to accounts of his business associate (ending in 3610 and 8378), whose
initials are N.A.  Then, after a few months of doing this for his girlfriend and business
associate, Susoeff also started disproportionately allocating winning trades to his own
account (ending in 4264).  Meanwhile, throughout the scheme, Susoeff was
consistently allocating losing trades to his disfavored clients’ accounts.
8. Throughout the relevant period, “Broker A,”   the broker with custody of
of Susoeff’s clients’ brokerage accounts, repeatedly warned Susoeff that he could not
allocate trades in a manner that systematically advantaged or disadvantaged clients,
and that Susoeff had to have procedures in place designed to ensure that trades were
allocated in way that all clients were treated fairly and equitably.  Susoeff ignored all
of these warnings and continued to cherry-pick favorable trades.
9. In total, Susoeff’s cherry-picking scheme enabled him to obtain
approximately $54,232 in ill-gotten gains for his own account, and approximately
$90,334 in ill-gotten gains for the favored accounts of H.E. and N.A.  At the same
time, the disfavored accounts suffered approximately $144,566 in first-day losses
attributable to the fraud.  Susoeff’s cherry-picking ceased when Broker A eventually
removed Susoeff and his advisory firm from its trading platform.
10. By engaging in this conduct, defendants Susoeff and Meritage Financial
violated the antifraud provisions of Sections 17(a)(1) and (a)(3) of the Securities Act,
15 U.S.C. § 77q(a)(1) and (a)(3), Section 10(b) of the Securities Exchange Act, 15
U.S.C. § 78j(b), and Rules 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and

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(c), and Sections 206(1) and 206(2) of the Advisers Act, 15 U.S.C. § 80b-6(1) and
(2).
11. With this action, the SEC seeks permanent injunctive relief against the
defendants to prevent future violations of the federal securities laws, disgorgement of
ill  -gotten gains along with prejudgment interest on a joint-and-several basis, and civil
penalties.
THE DEFENDANTS
12. Defendant Steven James Susoeff, is a resident of Henderson, Nevada.
Since approximately 2008, Susoeff has been the sole owner, officer, control person
and chief compliance officer of Meritage Financial.  Prior to 2008, Susoeff was a
registered representative at broker-dealers for 11 years.
13. Defendant Meritage Financial Group, also known as Steve Susoeff,
LLC, is a Nevada company with its principal place of business in Henderson,
Nevada, and is a registered investment adviser with Nevada and California.
According to its   March 25, 2022 Form ADV, Meritage Financial currently has 78
clients and $9 million in assets under management.
THE ALLEGATIONS
A. Background
14. Susoeff founded Meritage Financial on or around May 7, 2008 and by
January 2021 it had approximately 59 clients and approximately $8 million in assets
under management.
15. Meritage Financial provided a variety of financial planning services to
individuals, families and other clients regarding the management of their financial
resources based upon their financial situation, goals, and objectives.
16. At all relevant times, Susoeff and Meritage Financial were investment
advisers under Section 202(a)(11) of the Advisers Act, 15 U.S.C. §80b-2(a)(11),
because they provided investment advice for compensation to their clients regarding
securities.

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17. Susoeff and Meritage Financial provided investment advice by using
their discretionary authority over their clients’ accounts to buy and sell securities.
They received compensation by charging their clients an advisory fee that was a
percentage of their assets under management.
18. As the sole owner, officer, and control person of Meritage Financial,
Susoeff directly benefitted from the advisory fees that clients paid to Meritage
Financial.
19. Susoeff was the only person at Meritage Financial who provided
investment advice to its clients and was the only person who executed trades on
behalf of its clients.
20. Many of the trades that Susoeff executed on behalf of clients were
through its block trading account at Broker A, the custodian of the assets under
Meritage Financial’s management.
21. Meritage Financial’s block trading account at Broker A allowed Susoeff
to place a single trade in a stock through the block trading account, and later that
same day, allocate portions of that trade to multiple client accounts and/or his
personal account.
22. Susoeff was the only person at Meritage Financial who allocated trades
executed in  the block trading account.
B. The Cherry-Picking Scheme
23. From approximately January 2021 through approximately July 2021,
Susoeff and Meritage Financial misused the block trading account at Broker A to
engage in a fraudulent scheme to defraud their investment advisory clients by cherry-
picking and disproportionately allocating profitable trades to the accounts of his live-
in girlfriend, H.E., his business associate, N.A, and eventually to Susoeff’s own
account.  At the same time, Susoeff defrauded his other clients and violated the
fiduciary duties that he owed to them by disproportionately allocating the
unprofitable trades to their accounts.

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24. Suseoeff carried out this scheme by executing trades in the block trading
account and taking advantage of the time he had to allocate those trades in order to
determine the security’s intraday performance.
25. For example, when the price of a stock rose on the purchase date,
Susoeff disproportionately allocated those profitable trades to one or more of the
favored accounts.  In most instances, when Susoeff did this, he sold the security that
same day, making it a day-trade and locking in the profit.
26. By contrast, when the price of a stock went down on the purchase date,
Susoeff disproportionally allocated those unprofitable trades to the disfavored clients’
accounts as long positions (i.e., stocks to be held in their accounts).
27. This scheme, by its very nature, was inherently deceptive because
cherry-picking is virtually impossible for clients to detect on their own.  They
generally are unable to see how their adviser allocates trades and rely on their adviser
to meet his fiduciary duty of care to provide investment advice that is in their best
interest, and meet his fiduciary duty of loyalty by putting their financial interests
ahead of his own.  Thus, each allocation of a trade based on the security’s
performance was an inherently deceptive act in furtherance of the scheme.
28. As one example, on or about May 7, 2021, Susoeff used the block
trading account to purchase 767 shares of Apple, Inc. stock (“AAPL”) at 10:05 a.m.
for $130.485 (f or a total of $100,082).
29. Then, at 10:27 a.m. that same day, Susoeff sold 767 shares of AAPL for
$130.71 (for a total of $100,251).
30. At 1:30 p.m. that same day, Susoeff bought another 767 shares of AAPL
$130.225 (for a total of $99,883).
31. At the end of the day, the 4:00 p.m. closing price of AAPL stock was
down to $130.21.  At this time, Susoeff still had not allocated any of the block trading
account’s AAPL stock trades at 10:05 a.m. and 1:30 p.m. to any client accounts.
32. Beginning at 5:17 p.m., Susoeff allocated the 10:27 a.m. sale of 767

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AAPL shares for $130.71 and the subsequent 1:30 p.m. purchase of 767 AAPL shares
for $130.21 to the favored accounts, rendering this allocation profitable.
33. At 5:55 p.m., when the share price was trading at $130.22, Susoeff
allocated the bulk of the 767 AAPL shares purchased earlier at 10:05 a.m. (at the
higher price of $130.485) to the disfavored accounts (679 shares),  which in light of
the intraday price of AAPL’s stock rendered this allocation unprofitable.
34. Only a small portion of this unprofitable allocation (88 shares) went to
the favored accounts.
35. At the time of allocation, Susoeff knew the prices of the two block
purchases and the sale price of the block sale, as well as the current trade price.  He
allocated an AAPL day trade that would be most profitable to the favored accounts:
the 10:27 a.m. sale for $130.71 and the later 1:30 p.m. purchase for $130.225 for a
realized gain $0.458 per share.  To the disfavored accounts, he allocated at 5:55 p.m.,
after the stock had fallen to $130.22 at market close, the more expensive 10:05 a.m
purchase of $130.485, for a first-day unrealized loss of $0.265 per share.
36. In total, during the relevant period:  (1) Susoeff’s allocations resulted in
approximately 89.9 percent of the dollars traded on behalf of the favored accounts
being profitable at the time of the allocation; and (2) Susoeff’s allocations resulted in
only 25.5 percent of the dollars traded on behalf of the disfavored accounts being
profitable at the time of the allocation.   During the same period:  (1) Susoeff’s
allocations through the block trading account resulted in an approximate 0.61 percent
rate of return on investments for the favored accounts; and (2) Susoeff’s allocations
through the block trading account resulted in approximately -0.60 percent rate of
return on investments for the disfavored accounts.
37. The scheme resulted in Susoeff receiving ill-gotten gains of
approximately $54,232 and all of the favored accounts combined receiving
approximately $144,566 in ill-gotten gains.

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C. Susoeff’s Scienter and Negligence
38. Susoeff, whose mental state is imputed to Meritage Financial as its sole
owner and control person, knew, or was reckless in not knowing, that using the block
trading account to allocate winning trades to the favored accounts and losing trades to
the disfavored accounts defrauded his disfavored clients and violated the fiduciary
duties that he owed to those clients.
39. Susoeff also acted negligently; that is, he failed to act as a reasonable
person would under the circumstances when acting as his advisory clients’
investment adviser, including his allocation of trades in the block trading account.
1. Trade Blotter Analysis
40. Based on a statistical analysis of the subject trades, trade allocations, and
first-day investment returns, the likelihood that Susoeff’s disproportionate allocation
of profitable trades to the favored accounts and unprofitable trades to disfavored
accounts resulted from random chance, as opposed to knowing and intentional
conduct, is, at best, less than one in a million.
2. Broker A Repeatedly Warned Susoeff Not to Allocate Trades in a
Manner that Systematically Advantaged or Disadvantaged His
Clients
41. Beginning at least in or about December 2020 and continuing through
July 2021, Broker A repeatedly warned Susoeff not to allocate trades in a manner that
systematically advantaged or disadvantaged his clients.  Broker A began issuing these
warnings after noticing that Susoeff was late in allocating trades in the block trading
account, which violated Broker A’s policy that all traded allocations occur by no later
than 6 p.m. Eastern Standard Time and resulted in several financial penalties being
imposed against Susoeff.
42. Each time Susoeff was late in allocating trades in the block trading
account, Broker A sent Susoeff an email containing general information about how to
properly use the block trading account.

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43.  This information warned Susoeff that he could aggregate or “bunch”
orders in the block trading account “so long as ... no client is systematically
advantaged or disadvantaged by the bunching.”  It further warned Susoeff that he
“must have procedures in place that are designed to ensure that the trades are
allocated in such a manner that all clients are treated fairly and equitably.”
44. Broker A sent these emails and warnings to Susoeff on at least six
different occasions before and during the cherry-picking scheme, including on or
about December 14, 2020, December 15, 2020, April 12, 2021, April 26, 2021, May
19, 2021 and July 13, 2021.
45. Despite receiving these warnings, Susoeff continued to misuse the block
trading account for the cherry-picking scheme, disproportionately allocating
profitable trades to the favored accounts and unprofitable trades to other disfavored
accounts.
46. Moreover, Susoeff never kept records of his trade allocations and had no
procedures in place that were designed to ensure that the trades were allocated in a
manner that all clients were treated fairly and equitably.
3. Susoeff’s    Fiduciary Duty to His Advisory Clients
47. Susoeff’s scienter and negligence is further evidenced by the fiduciary
duties that he owed to his clients.
48. Susoeff and Meritage Financial were fiduciaries for their advisory
clients.
49. Susoeff and Meritage Financial owed their advisory clients a duty of
loyalty.  That duty of loyalty included an affirmative duty of utmost good faith, a
duty to provide full and fair disclosure of all material facts, and a duty to employ
reasonable care to avoid misleading their clients.  Susoeff and Meritage Financial’s
duty to disclose all material facts included a duty to tell clients about actual or
potential conflicts of interest that might incline Susoeff and Meritage Financial to
render investment advise that is not disinterested.

COMPLAINT
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50. Susoeff and Meritage Financial owed their advisory clients a separate
duty of care.  Their duty of care included a duty to provide investment advice that
was in the best interest of their client, including a duty to provide advice that was
suitable for their advisory clients.  Susoeff and Meritage Financial’s duty of care also
included a duty to seek best execution of their clients’ securities transactions because
they were responsible for choosing the broker- dealer that would execute their clients’
trades.
51. Susoeff knew, or was reckless for not knowing, that he owed his clients
these fiduciary duties because they were acknowledged in the company’s code of
ethics and its policies and procedures manual, which Susoeff was required to know
and examine as the chief compliance officer (“CCO”) of Meritage Financial.
52. For instance, the policies and procedures manual made it clear that
Meritage Financial was a fiduciary to its advisory clients, and had a duty of undivided
loyalty to always act in utmost good faith, place its clients' interests first and
foremost, and to make full and fair disclosure of all material facts including
information as to any conflicts of interest.  It   also prohibited Meritage Financial and
Susoeff, as one of its investment adviser representatives, from carrying out any
device, scheme or artifice to defraud a client and from engaging in any transaction,
practice or course of business that would do so.
53. The policies and procedures manual further stated that, as the CCO, it
was Susoeff’s responsibility to monitor how he performed his job duties and to
ensure they comported with his fiduciary obligations.  This included making sure that
he placed the interests of his clients ahead of his own and conducted business in an
ethical fashion.
54. Similarly, the code of ethics made it clear that Susoeff and Meritage
Financial owed a fiduciary duty to their clients and must at all times place the interest
of their clients above their own.  This meant that whenever any questions arose
concerning Susoeff’s trading in securities it  had to be resolved in favor of the interest

COMPLAINT
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of his clients, even if that meant at the expense of Susoeff’s interest.
FIRST CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c)
(against All Defendants)
55. The SEC realleges and incorporates by reference paragraphs 1 through
54 above.
56. As alleged above, defendants Susoeff and Meritage Financial engaged in
a scheme to defraud their clients, and engaged in acts, practices or courses of business
that operated as a fraud upon their clients, by cherry-picking profitable trades to be
allocated to the favored accounts and unprofitable trades to the disfavored accounts.
The cherry-picking scheme was inherently deceptive and created the false appearance
that disfavored clients’ first-day losses were attributable to market forces rather than
his fraudulent trade allocation practices.
57. By engaging in the conduct described above, defendants Susoeff and
Meritage Financial, and each of them, directly or indirectly, in connection with the
purchase or sale of a security, and by the use of means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities
exchange:  (a) employed devices, schemes, or artifices to defraud; and (b) engaged in
acts, practices, or courses of business which operated or would operate as a fraud or
deceit upon other persons.
58. By engaging in the conduct described above, defendants Susoeff and
Meritage Financial violated, and unless restrained and enjoined will continue to
violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a)
and 10b-5(c) thereunder, 17 C.F.R. §§ 240.10b-5(a) & 240.10b-5(c).

COMPLAINT
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SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Sections 17(a)(1) and (3) of the Securities Act
(against All Defendants)
59. The SEC realleges and incorporates by reference paragraphs 1 through
54 above.
60. As alleged above, defendants Susoeff and Meritage Financial engaged in
a scheme to defraud their clients, and engaged in acts, practices or courses of business
that operated as a fraud upon their clients, by cherry-picking profitable trades to be
allocated to the favored accounts and unprofitable trades to the disfavored accounts.
The cherry-picking scheme was inherently deceptive and created the false appearance
that disfavored clients’ first-day losses were attributable to market forces rather than
his fraudulent trade allocation practices.
61. By engaging in the conduct described above, defendants Susoeff and
Meritage Financial, and each of them, directly or indirectly, in the offer or sale of
securities, and by the use of means or instruments of transportation or communication
in interstate commerce or by use of the mails directly or indirectly:  (a) employed
devices, schemes, or artifices to defraud; and (b) engaged in transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon the
purchaser.
62. By engaging in the conduct described above, defendants Susoeff and
Meritage Financial violated, and unless restrained and enjoined will continue to
violate, Sections 17(a)(1) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1)
& 77q(a)(3).

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THIRD CLAIM FOR RELIEF
Fraud by an Investment Adviser
Violations of Sections 206(1) and 206(2) of the Advisers Act
(against All Defendants)
63. The SEC realleges and incorporates by reference paragraphs 1 through
54 above.
64. As alleged above, defendants Susoeff and Meritage Financial were
investment advisers and therefore owed a fiduciary duty to each of their clients.
Susoeff and Meritage Financial each breached their fiduciary duty to their clients by
carrying out the cherry-picking scheme, which was inherently deceptive and created
the false appearance that disfavored clients’ first-day losses were attributable to
market forces rather than his fraudulent trade allocation practices.
65. By engaging in the conduct described above, Susoeff and Meritage
Financial, and each of them, directly or indirectly, by use of the mails or means and
instrumentalities of interstate commerce: (a) employed or are employing devices,
schemes or artifices to defraud clients or prospective clients; and engaged in or are
engaging in transactions, practices, or courses of business which operated as a fraud
or deceit upon clients or prospective clients.
66. By engaging in the conduct described above, Susoeff and Meritage
Financial have violated, and unless restrained and enjoined, are reasonably likely to
continue to violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-
6(1) & 80b-6(2).
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that defendants Susoeff and
Meritage Financial committed the alleged violations.

COMPLAINT
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II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Susoeff and Meritage Financial, and their
officers, agents, servants, employees and attorneys, and those persons in active
concert or participation with any of them, who receive actual notice of the judgment
by personal service or otherwise, and each of them, from violating Section 17(a) of
the Securities Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 206 of the
Advisers Act [15 U.S.C. § 80b-6].
III.
Order Defendants to disgorge all funds received from their illegal conduct, on a
joint and several basis, together with prejudgment interest thereon pursuant to
Securities Exchange Act of 1934, Section 21(d)(3), (d)(5) and (d)(7) [15 U.S.C. §§
78u(d)(3), (d)(5) and (d)(7)].
IV.
Order Defendants to pay civil penalties under Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)], and Section 209(e) of the Adviser Act [15 U.S.C. § 80b-9(e)].
V.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.

COMPLAINT
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VI.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  February 1, 2023

/s/ Gary Y. Leung
GARY Y. LEUNG
Attorney for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

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DOUGLAS M. MILLER (Cal. Bar No. 240398) 
Email:  [email protected] 
KELLY C. BOWERS (Cal. Bar No. 164007) 
Email:  [email protected] 

Attorneys for Plaintiff 
Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
Katharine Zoladz, Associate Regional Director 
Gary Y, Leung, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEVADA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

STEVEN J. SUSOEFF and STEVE 
SUSOEFF, LLC (dba Meritage 
Financial Group), 

Defendants. 

Case No. 

COMPLAINT 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b),

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the 

Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-

2:23-cv-173

Case 2:23-cv-00173   Document 1   Filed 02/01/23   Page 1 of 15



 

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9(e)(1) & 90b-14. 

2. Defendants have, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), and 

Section 214 of the Advisers Act, 15 U.S.C. §§ 80b-14, because certain of the 

transactions, acts, practices and courses of conduct constituting violations of the 

federal securities laws occurred within this district.  In addition, venue is proper in 

this district because Defendants Steven J. Susoeff (“Susoeff”) and Steve Susoeff, 

LLC (dba Meritage Financial Group) (“Meritage Financial”) reside in this district. 

SUMMARY 

4. This case is about a “cherry-picking” scheme carried out by Susoeff, an 

investment adviser representative, and by his investment adviser firm, Meritage 

Financial, which Susoeff solely owned and controlled.     

5. Between in or about January 2021 and July 2021, Meritage Financial 

managed approximately $8 million for approximately 59 clients.  During this time, 

Susoeff had discretionary authority over his clients’ accounts, meaning he had the 

authority to make investment decisions and execute trades on his clients’ behalf.  

Susoeff executed many of these trades through what is commonly called a “block 

trading account,” which allowed him to aggregate and execute trades for several 

clients in one account, and later allocate each trade to individual client accounts.  

These aggregated trade allocations could be submitted to the brokerage firm at the 

end of the trading day, so Susoeff had the opportunity to “cherry-pick” – that is, to 

allocate the winning trades to some favored accounts, and to allocate the losing trades 

to other disfavored accounts. 

6. However, allocating trades in a way that favors some accounts over 

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COMPLAINT 3  
 

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other disfavored accounts defrauds the disfavored clients and violates the fiduciary 

duties that an investment adviser owes to them, including Susoeff’s duty of care and 

duty of loyalty to his advisory clients.  Nevertheless, that is exactly what Susoeff and 

Meritage Financial did in this case.   

7. For approximately seven months, Susoeff and his advisory firm engaged 

in a cherry-picking scheme.  It began with Susoeff disproportionately allocating 

winning trades to an account of his girlfriend (ending in 9566), whose initials are 

H.E., and to accounts of his business associate (ending in 3610 and 8378), whose 

initials are N.A.  Then, after a few months of doing this for his girlfriend and business 

associate, Susoeff also started disproportionately allocating winning trades to his own 

account (ending in 4264).  Meanwhile, throughout the scheme, Susoeff was 

consistently allocating losing trades to his disfavored clients’ accounts.   

8. Throughout the relevant period, “Broker A,” the broker with custody of 

of Susoeff’s clients’ brokerage accounts, repeatedly warned Susoeff that he could not 

allocate trades in a manner that systematically advantaged or disadvantaged clients, 

and that Susoeff had to have procedures in place designed to ensure that trades were 

allocated in way that all clients were treated fairly and equitably.  Susoeff ignored all 

of these warnings and continued to cherry-pick favorable trades.   

9. In total, Susoeff’s cherry-picking scheme enabled him to obtain 

approximately $54,232 in ill-gotten gains for his own account, and approximately 

$90,334 in ill-gotten gains for the favored accounts of H.E. and N.A.  At the same 

time, the disfavored accounts suffered approximately $144,566 in first-day losses 

attributable to the fraud.  Susoeff’s cherry-picking ceased when Broker A eventually 

removed Susoeff and his advisory firm from its trading platform.   

10. By engaging in this conduct, defendants Susoeff and Meritage Financial 

violated the antifraud provisions of Sections 17(a)(1) and (a)(3) of the Securities Act, 

15 U.S.C. § 77q(a)(1) and (a)(3), Section 10(b) of the Securities Exchange Act, 15 

U.S.C. § 78j(b), and Rules 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and 

Case 2:23-cv-00173   Document 1   Filed 02/01/23   Page 3 of 15



 

COMPLAINT 4  
 

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(c), and Sections 206(1) and 206(2) of the Advisers Act, 15 U.S.C. § 80b-6(1) and 

(2).   

11. With this action, the SEC seeks permanent injunctive relief against the 

defendants to prevent future violations of the federal securities laws, disgorgement of 

ill-gotten gains along with prejudgment interest on a joint-and-several basis, and civil 

penalties. 

THE DEFENDANTS 

12. Defendant Steven James Susoeff, is a resident of Henderson, Nevada. 

Since approximately 2008, Susoeff has been the sole owner, officer, control person 

and chief compliance officer of Meritage Financial.  Prior to 2008, Susoeff was a 

registered representative at broker-dealers for 11 years. 

13. Defendant Meritage Financial Group, also known as Steve Susoeff, 

LLC, is a Nevada company with its principal place of business in Henderson, 

Nevada, and is a registered investment adviser with Nevada and California.  

According to its March 25, 2022 Form ADV, Meritage Financial currently has 78 

clients and $9 million in assets under management. 

THE ALLEGATIONS 

A. Background 

14. Susoeff founded Meritage Financial on or around May 7, 2008 and by 

January 2021 it had approximately 59 clients and approximately $8 million in assets  

under management.   

15. Meritage Financial provided a variety of financial planning services to 

individuals, families and other clients regarding the management of their financial 

resources based upon their financial situation, goals, and objectives. 

16. At all relevant times, Susoeff and Meritage Financial were investment 

advisers under Section 202(a)(11) of the Advisers Act, 15 U.S.C. §80b-2(a)(11), 

because they provided investment advice for compensation to their clients regarding 

securities.   

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COMPLAINT 5  
 

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17. Susoeff and Meritage Financial provided investment advice by using 

their discretionary authority over their clients’ accounts to buy and sell securities.  

They received compensation by charging their clients an advisory fee that was a 

percentage of their assets under management.     

18. As the sole owner, officer, and control person of Meritage Financial, 

Susoeff directly benefitted from the advisory fees that clients paid to Meritage 

Financial. 

19. Susoeff was the only person at Meritage Financial who provided 

investment advice to its clients and was the only person who executed trades on 

behalf of its clients.   

20. Many of the trades that Susoeff executed on behalf of clients were 

through its block trading account at Broker A, the custodian of the assets under 

Meritage Financial’s management.   

21. Meritage Financial’s block trading account at Broker A allowed Susoeff 

to place a single trade in a stock through the block trading account, and later that 

same day, allocate portions of that trade to multiple client accounts and/or his 

personal account.   

22. Susoeff was the only person at Meritage Financial who allocated trades 

executed in the block trading account. 

B. The Cherry-Picking Scheme 

23. From approximately January 2021 through approximately July 2021, 

Susoeff and Meritage Financial misused the block trading account at Broker A to 

engage in a fraudulent scheme to defraud their investment advisory clients by cherry-

picking and disproportionately allocating profitable trades to the accounts of his live-

in girlfriend, H.E., his business associate, N.A, and eventually to Susoeff’s own 

account.  At the same time, Susoeff defrauded his other clients and violated the 

fiduciary duties that he owed to them by disproportionately allocating the 

unprofitable trades to their accounts.   

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COMPLAINT 6  
 

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24. Suseoeff carried out this scheme by executing trades in the block trading 

account and taking advantage of the time he had to allocate those trades in order to 

determine the security’s intraday performance.   

25. For example, when the price of a stock rose on the purchase date, 

Susoeff disproportionately allocated those profitable trades to one or more of the 

favored accounts.  In most instances, when Susoeff did this, he sold the security that 

same day, making it a day-trade and locking in the profit.   

26. By contrast, when the price of a stock went down on the purchase date, 

Susoeff disproportionally allocated those unprofitable trades to the disfavored clients’ 

accounts as long positions (i.e., stocks to be held in their accounts).   

27. This scheme, by its very nature, was inherently deceptive because 

cherry-picking is virtually impossible for clients to detect on their own.  They 

generally are unable to see how their adviser allocates trades and rely on their adviser 

to meet his fiduciary duty of care to provide investment advice that is in their best 

interest, and meet his fiduciary duty of loyalty by putting their financial interests 

ahead of his own.  Thus, each allocation of a trade based on the security’s 

performance was an inherently deceptive act in furtherance of the scheme. 

28. As one example, on or about May 7, 2021, Susoeff used the block 

trading account to purchase 767 shares of Apple, Inc. stock (“AAPL”) at 10:05 a.m. 

for $130.485 (for a total of $100,082).   

29. Then, at 10:27 a.m. that same day, Susoeff sold 767 shares of AAPL for 

$130.71 (for a total of $100,251).   

30. At 1:30 p.m. that same day, Susoeff bought another 767 shares of AAPL 

$130.225 (for a total of $99,883).   

31. At the end of the day, the 4:00 p.m. closing price of AAPL stock was 

down to $130.21.  At this time, Susoeff still had not allocated any of the block trading 

account’s AAPL stock trades at 10:05 a.m. and 1:30 p.m. to any client accounts.   

32. Beginning at 5:17 p.m., Susoeff allocated the 10:27 a.m. sale of 767 

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COMPLAINT 7  
 

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AAPL shares for $130.71 and the subsequent 1:30 p.m. purchase of 767 AAPL shares 

for $130.21 to the favored accounts, rendering this allocation profitable.   

33. At 5:55 p.m., when the share price was trading at $130.22, Susoeff 

allocated the bulk of the 767 AAPL shares purchased earlier at 10:05 a.m. (at the 

higher price of $130.485) to the disfavored accounts (679 shares), which in light of 

the intraday price of AAPL’s stock rendered this allocation unprofitable.   

34. Only a small portion of this unprofitable allocation (88 shares) went to 

the favored accounts. 

35. At the time of allocation, Susoeff knew the prices of the two block 

purchases and the sale price of the block sale, as well as the current trade price.  He 

allocated an AAPL day trade that would be most profitable to the favored accounts: 

the 10:27 a.m. sale for $130.71 and the later 1:30 p.m. purchase for $130.225 for a 

realized gain $0.458 per share.  To the disfavored accounts, he allocated at 5:55 p.m., 

after the stock had fallen to $130.22 at market close, the more expensive 10:05 a.m 

purchase of $130.485, for a first-day unrealized loss of $0.265 per share. 

36. In total, during the relevant period:  (1) Susoeff’s allocations resulted in 

approximately 89.9 percent of the dollars traded on behalf of the favored accounts 

being profitable at the time of the allocation; and (2) Susoeff’s allocations resulted in 

only 25.5 percent of the dollars traded on behalf of the disfavored accounts being 

profitable at the time of the allocation.   During the same period:  (1) Susoeff’s 

allocations through the block trading account resulted in an approximate 0.61 percent 

rate of return on investments for the favored accounts; and (2) Susoeff’s allocations 

through the block trading account resulted in approximately -0.60 percent rate of 

return on investments for the disfavored accounts.   

37. The scheme resulted in Susoeff receiving ill-gotten gains of 

approximately $54,232 and all of the favored accounts combined receiving 

approximately $144,566 in ill-gotten gains.   

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C. Susoeff’s Scienter and Negligence 

38. Susoeff, whose mental state is imputed to Meritage Financial as its sole 

owner and control person, knew, or was reckless in not knowing, that using the block 

trading account to allocate winning trades to the favored accounts and losing trades to 

the disfavored accounts defrauded his disfavored clients and violated the fiduciary 

duties that he owed to those clients.   

39. Susoeff also acted negligently; that is, he failed to act as a reasonable 

person would under the circumstances when acting as his advisory clients’ 

investment adviser, including his allocation of trades in the block trading account.   

1. Trade Blotter Analysis 

40. Based on a statistical analysis of the subject trades, trade allocations, and 

first-day investment returns, the likelihood that Susoeff’s disproportionate allocation 

of profitable trades to the favored accounts and unprofitable trades to disfavored 

accounts resulted from random chance, as opposed to knowing and intentional 

conduct, is, at best, less than one in a million. 

2. Broker A Repeatedly Warned Susoeff Not to Allocate Trades in a 

Manner that Systematically Advantaged or Disadvantaged His 

Clients 

41. Beginning at least in or about December 2020 and continuing through 

July 2021, Broker A repeatedly warned Susoeff not to allocate trades in a manner that 

systematically advantaged or disadvantaged his clients.  Broker A began issuing these 

warnings after noticing that Susoeff was late in allocating trades in the block trading 

account, which violated Broker A’s policy that all traded allocations occur by no later 

than 6 p.m. Eastern Standard Time and resulted in several financial penalties being 

imposed against Susoeff.   

42. Each time Susoeff was late in allocating trades in the block trading 

account, Broker A sent Susoeff an email containing general information about how to 

properly use the block trading account.   

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43.  This information warned Susoeff that he could aggregate or “bunch” 

orders in the block trading account “so long as … no client is systematically 

advantaged or disadvantaged by the bunching.”  It further warned Susoeff that he 

“must have procedures in place that are designed to ensure that the trades are 

allocated in such a manner that all clients are treated fairly and equitably.” 

44. Broker A sent these emails and warnings to Susoeff on at least six 

different occasions before and during the cherry-picking scheme, including on or 

about December 14, 2020, December 15, 2020, April 12, 2021, April 26, 2021, May 

19, 2021 and July 13, 2021.   

45. Despite receiving these warnings, Susoeff continued to misuse the block 

trading account for the cherry-picking scheme, disproportionately allocating 

profitable trades to the favored accounts and unprofitable trades to other disfavored 

accounts.   

46. Moreover, Susoeff never kept records of his trade allocations and had no 

procedures in place that were designed to ensure that the trades were allocated in a 

manner that all clients were treated fairly and equitably.   

3. Susoeff’s Fiduciary Duty to His Advisory Clients 

47. Susoeff’s scienter and negligence is further evidenced by the fiduciary 

duties that he owed to his clients.   

48. Susoeff and Meritage Financial were fiduciaries for their advisory 

clients. 

49. Susoeff and Meritage Financial owed their advisory clients a duty of 

loyalty.  That duty of loyalty included an affirmative duty of utmost good faith, a 

duty to provide full and fair disclosure of all material facts, and a duty to employ 

reasonable care to avoid misleading their clients.  Susoeff and Meritage Financial’s 

duty to disclose all material facts included a duty to tell clients about actual or 

potential conflicts of interest that might incline Susoeff and Meritage Financial to 

render investment advise that is not disinterested. 

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COMPLAINT 10  
 

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50. Susoeff and Meritage Financial owed their advisory clients a separate 

duty of care.  Their duty of care included a duty to provide investment advice that 

was in the best interest of their client, including a duty to provide advice that was 

suitable for their advisory clients.  Susoeff and Meritage Financial’s duty of care also 

included a duty to seek best execution of their clients’ securities transactions because 

they were responsible for choosing the broker-dealer that would execute their clients’ 

trades.   

51. Susoeff knew, or was reckless for not knowing, that he owed his clients 

these fiduciary duties because they were acknowledged in the company’s code of 

ethics and its policies and procedures manual, which Susoeff was required to know 

and examine as the chief compliance officer (“CCO”) of Meritage Financial.   

52. For instance, the policies and procedures manual made it clear that 

Meritage Financial was a fiduciary to its advisory clients, and had a duty of undivided 

loyalty to always act in utmost good faith, place its clients' interests first and 

foremost, and to make full and fair disclosure of all material facts including 

information as to any conflicts of interest.  It also prohibited Meritage Financial and 

Susoeff, as one of its investment adviser representatives, from carrying out any 

device, scheme or artifice to defraud a client and from engaging in any transaction, 

practice or course of business that would do so.   

53. The policies and procedures manual further stated that, as the CCO, it 

was Susoeff’s responsibility to monitor how he performed his job duties and to 

ensure they comported with his fiduciary obligations.  This included making sure that 

he placed the interests of his clients ahead of his own and conducted business in an 

ethical fashion. 

54. Similarly, the code of ethics made it clear that Susoeff and Meritage 

Financial owed a fiduciary duty to their clients and must at all times place the interest 

of their clients above their own.  This meant that whenever any questions arose 

concerning Susoeff’s trading in securities it had to be resolved in favor of the interest 

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of his clients, even if that meant at the expense of Susoeff’s interest.   

FIRST CLAIM FOR RELIEF 

Fraud in Connection with the Purchase or Sale of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 

(against All Defendants) 

55. The SEC realleges and incorporates by reference paragraphs 1 through 

54 above. 

56. As alleged above, defendants Susoeff and Meritage Financial engaged in 

a scheme to defraud their clients, and engaged in acts, practices or courses of business 

that operated as a fraud upon their clients, by cherry-picking profitable trades to be 

allocated to the favored accounts and unprofitable trades to the disfavored accounts.  

The cherry-picking scheme was inherently deceptive and created the false appearance 

that disfavored clients’ first-day losses were attributable to market forces rather than 

his fraudulent trade allocation practices.   

57. By engaging in the conduct described above, defendants Susoeff and 

Meritage Financial, and each of them, directly or indirectly, in connection with the 

purchase or sale of a security, and by the use of means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities 

exchange:  (a) employed devices, schemes, or artifices to defraud; and (b) engaged in 

acts, practices, or courses of business which operated or would operate as a fraud or 

deceit upon other persons. 

58. By engaging in the conduct described above, defendants Susoeff and 

Meritage Financial violated, and unless restrained and enjoined will continue to 

violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a) 

and 10b-5(c) thereunder, 17 C.F.R. §§ 240.10b-5(a) & 240.10b-5(c). 

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COMPLAINT 12  
 

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SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Sections 17(a)(1) and (3) of the Securities Act 

(against All Defendants) 

59. The SEC realleges and incorporates by reference paragraphs 1 through 

54 above. 

60. As alleged above, defendants Susoeff and Meritage Financial engaged in 

a scheme to defraud their clients, and engaged in acts, practices or courses of business 

that operated as a fraud upon their clients, by cherry-picking profitable trades to be 

allocated to the favored accounts and unprofitable trades to the disfavored accounts.  

The cherry-picking scheme was inherently deceptive and created the false appearance 

that disfavored clients’ first-day losses were attributable to market forces rather than 

his fraudulent trade allocation practices.   

61. By engaging in the conduct described above, defendants Susoeff and 

Meritage Financial, and each of them, directly or indirectly, in the offer or sale of 

securities, and by the use of means or instruments of transportation or communication 

in interstate commerce or by use of the mails directly or indirectly:  (a) employed 

devices, schemes, or artifices to defraud; and (b) engaged in transactions, practices, or 

courses of business which operated or would operate as a fraud or deceit upon the 

purchaser. 

62. By engaging in the conduct described above, defendants Susoeff and 

Meritage Financial violated, and unless restrained and enjoined will continue to 

violate, Sections 17(a)(1) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1) 

& 77q(a)(3). 

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COMPLAINT 13  
 

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THIRD CLAIM FOR RELIEF 

Fraud by an Investment Adviser 

Violations of Sections 206(1) and 206(2) of the Advisers Act 

(against All Defendants) 

63. The SEC realleges and incorporates by reference paragraphs 1 through 

54 above. 

64. As alleged above, defendants Susoeff and Meritage Financial were 

investment advisers and therefore owed a fiduciary duty to each of their clients. 

Susoeff and Meritage Financial each breached their fiduciary duty to their clients by 

carrying out the cherry-picking scheme, which was inherently deceptive and created 

the false appearance that disfavored clients’ first-day losses were attributable to 

market forces rather than his fraudulent trade allocation practices.   

65. By engaging in the conduct described above, Susoeff and Meritage 

Financial, and each of them, directly or indirectly, by use of the mails or means and 

instrumentalities of interstate commerce: (a) employed or are employing devices, 

schemes or artifices to defraud clients or prospective clients; and engaged in or are 

engaging in transactions, practices, or courses of business which operated as a fraud 

or deceit upon clients or prospective clients. 

66. By engaging in the conduct described above, Susoeff and Meritage 

Financial have violated, and unless restrained and enjoined, are reasonably likely to 

continue to violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-

6(1) & 80b-6(2).  

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that defendants Susoeff and 

Meritage Financial committed the alleged violations. 

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II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Susoeff and Meritage Financial, and their 

officers, agents, servants, employees and attorneys, and those persons in active 

concert or participation with any of them, who receive actual notice of the judgment 

by personal service or otherwise, and each of them, from violating Section 17(a) of 

the Securities Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 206 of the 

Advisers Act [15 U.S.C. § 80b-6]. 

III. 

Order Defendants to disgorge all funds received from their illegal conduct, on a 

joint and several basis, together with prejudgment interest thereon pursuant to 

Securities Exchange Act of 1934, Section 21(d)(3), (d)(5) and (d)(7) [15 U.S.C. §§ 

78u(d)(3), (d)(5) and (d)(7)]. 

IV. 

Order Defendants to pay civil penalties under Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)], and Section 209(e) of the Adviser Act [15 U.S.C. § 80b-9(e)]. 

V. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

  

Case 2:23-cv-00173   Document 1   Filed 02/01/23   Page 14 of 15



 

COMPLAINT 15  
 

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VI. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  February 1, 2023  
 /s/ Gary Y. Leung   

GARY Y. LEUNG 
Attorney for Plaintiff 
Securities and Exchange Commission 
 

 
 

Case 2:23-cv-00173   Document 1   Filed 02/01/23   Page 15 of 15