The Securities and Exchange Commission charged former registered representative and investment adviser Michael Barry Carter with fraud for stealing from brokerage customers and an elderly advisory client.
The SEC's complaint alleges that Carter, a financial advisor in the McLean, Va. office of a large financial institution, falsified internal documents in order to effect dozens of unauthorized wire transfers, totaling millions of dollars, from the accounts of brokerage customers to his personal bank account.
According to the complaint, to generate some of the funds that he misappropriated, Carter sold securities without customer authorization. As alleged, Carter employed various methods to conceal his misconduct from his brokerage customers, including diverting account statements to addresses he controlled.
The complaint further alleges that Carter made almost $1.5 million in unauthorized transfers from the accounts of an elderly advisory client, sending nearly $1 million to himself, and using some of the remainder to repay funds he had taken from a brokerage customer.
Carter also allegedly misappropriated funds from the client that originated from 529-plan college savings accounts held at another financial institution for the benefit of the her grandchildren. The complaint alleges that Carter used the funds he misappropriated from his customers and client to support his lavish lifestyle.
"As a financial advisor, Carter was entrusted with millions of dollars belonging to his brokerage customers, his advisory clients, and their families," said Marc P. Berger, director of the SEC's New York Regional Office. "As alleged in our complaint, Carter instead took advantage of that trust for his personal gain."
The SEC's complaint, filed in the U.S. District Court for the District of Maryland, charges Carter with violations of the antifraud provisions of the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. The SEC is seeking injunctive relief, the return of allegedly ill-gotten gains plus prejudgment interest, and a civil penalty.
In a parallel action, the U.S. Attorney's Office for the District of Maryland today announced criminal charges against Carter. Carter has pled guilty to those charges.
Investors can find additional information about how to protect their investments at Investor.gov. The Office of Investor Education and Advocacy and Division of Enforcement's Retail Strategy Task Force encourage senior investors to learn more at the senior investor education webpages on Investor.gov and report any suspicious investment-related activity or schemes using the SEC's online tips, complaints, and referrals (TCR) system.
The SEC's investigation, which is continuing, is being conducted by Eric Kirsch, Jonathan Grant, James Flynn, and Wendy Tepperman. The litigation will be led by Dugan Bliss, and the case is being supervised by Lara Shalov Mehraban. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Maryland, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.