The Securities and Exchange Commission (SEC) announced earlier today that it has charged Michael Barry Carter with fraud for stealing from brokerage customers and an elderly advisory client.
Carter was a former registered representative and investment advisor in the McLean, Virginia office of a large financial institution. According to the SEC’s complaint, he falsified internal documents, which allowed him to execute unauthorized wire transfers from the accounts of brokerage customers to his personal bank account, totaling millions of dollars.
Furthermore, according to the complaint, Carter sold securities without customer authorization in order to generate some of the funds that he misappropriated. According to the SEC, he used numerous tactics to cover his tracks, including diverting account statements to addresses he controlled.
In addition to the above-mentioned transgressions, the complaint from the SEC further alleges that Carter made around $1.5 million in unauthorized transfers from the accounts of an elderly advisory client.
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SEC: Carter stole to fund his lavish lifestyle
As part of this, he sent almost $1 million to himself and used the remainder to repay the funds that he had taken from a brokerage customer. Not only this, but he also allegedly misappropriated funds from the client that originated from 529-plan college savings accounts to support his lavish lifestyle.
Commenting on the situation, Marc P. Berger, Director of the SEC’s New York Regional Office, said in the statement: “As a financial advisor, Carter was entrusted with millions of dollars belonging to his brokerage customers, his advisory clients, and their families. As alleged in our complaint, Carter instead took advantage of that trust for his personal gain.”
The SEC complaint has been filed with the U.S. District Court for the District of Maryland. It has charged him with violating the antifraud provisions of the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. The regulator is seeking injunctive relief, the return of allegedly ill-gotten gains plus prejudgment interest, and a civil penalty.
In a parallel action, Carter has pled guilty to criminal charges brought by the U.S. Attorney’s Office for the District of Maryland.