The Securities and Exchange Commission has charged Massachusetts-based investment adviser and former LPL Financial broker, James K. Couture, with defrauding his advisory clients and misappropriating approximately $2.9 million.
The SEC’s complaint, filed in federal court in Massachusetts, alleges that from approximately 2009 to December 2019, Couture, while operating an investment advisory and brokerage business, fraudulently prompted his advisory clients to sell portions of their securities holdings to fund large money transfers to an entity that, unbeknownst to his clients, he owned and controlled.
According to the SEC’s complaint, Couture fabricated account statement that that showed their recently sold securities had been “reinvested.”
“The fabricated documents reflected securities transactions that never happened, current investments that did not exist, and earnings that the clients never received, all to create the false appearance that Couture had reinvested his clients’ money,” the complaint states.
When his clients requested withdrawals, Couture allegedly took funds from other advisory clients to cover those withdrawals. The SEC claims that in order to hide this misappropriation, he transferred client money through a web of third-party accounts to disguise that he was misappropriating money from one client to replace funds he had previously stolen from another.
According to his BrokerCheck profile, Couture spent 11 years at LPL before being fired last June for allegedly altering customer account statements, maintaining commingled customer funds, and using an unapproved email address. He was barred by FINRA in October for refusing to comply with the regulator’s requests for information related to their investigation into his termination from LPL.
In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts announced criminal charges.
The SEC’s complaint charges Couture with violating the antifraud provisions various federal securities laws and seeks a permanent injunction, disgorgement and prejudgment interest, and a civil monetary penalty.