Portfolio Manager Agrees to Plead Guilty to Securities Fraud
BOSTON – A Vice President and Options Portfolio Manager for a Boston-based asset management firm has agreed to plead guilty in connection with a scheme to defraud funds managed by his firm, which made him more than $1.9 million in profits.
Kevin Amell, 45, of Hingham, has agreed to plead guilty to one count of securities fraud.
It is alleged that from December 2014 to February 2017, Amell used the funds he managed to sell options to, and occasionally buy options from, his personal brokerage accounts. Specifically, given his position as Vice President and Options Portfolio Manager, Amell had visibility into the options markets and could see the buy and sell orders for a particular option at a particular time. As a result, Amell could see the “spread” - the price buyers were willing to pay for the option and the price at which sellers were willing to sell the option at any given time. Amell defrauded his firm and the funds managed by the firm, by buying options at prices below the price at which other market participants were willing to sell at that point in time. Amell then sold the options he had purchased from the funds at higher prices, thereby profiting at the expense of the funds he managed. On occasion, Amell also purchased options at a lower price and then immediately sold them to the funds at a higher price.
Amell allegedly carried out the scheme by placing orders in his personal brokerage accounts to buy specific options at a specific price and, within seconds, placed orders on behalf of the funds to sell the same options at the same price. By controlling the prices and the timing of the sales in this way, he guaranteed that he could buy the options himself and make a profit. Amell made more than $1.9 million on the scheme. It is further alleged that, to conceal the fraud from his employer, Amell failed to disclose to the firm the existence of his personal brokerage accounts as required.
The securities fraud statute provides for a sentence of no greater than 20 years in prison, five years of supervised releaseand a fine of $5 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors. According to the plea agreement, which was also filed today, the U.S. Attorney’s Office has agreed to recommend a sentence of no greater than 27 months in prison. Amell has also agreed to forfeit $1,954,457.
The Securities and Exchange Commission today filed a parallel civil action.
Acting United States Attorney William D. Weinreb and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Attorney’s Office received valuable assistance from the Securities and Exchange Commission. Assistant U.S. Attorney Sarah E. Walters, Chief of Weinreb’s Economic Crimes Unit, is prosecuting the case.
The details contained in the charging document are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.