SEC Charges Former Morgan Stanley Advisor with Fraud
The Securities and Exchange Commission has charged former registered representative and investment adviser Michael Barry Carter with fraud for allegedly stealing from brokerage customers and an elderly advisory client.
The Securities and Exchange Commission has charged former registered representative and investment adviser Michael Barry Carter with fraud for allegedly stealing from brokerage customers and an elderly advisory client.
According to his BrokerCheck profile, Carter spent seven years with Morgan Stanley but was terminated last July after allegations that he misappropriated client funds. He was barred by FINRA shortly thereafter for failing to provide documents and information to the regulators during the course of an investigation.
The SEC’s complaint alleges that Carter 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. The SEC also claims that he employed various methods to conceal his misconduct from his brokerage customers, including diverting account statements to addresses he controlled.
Carter purportedly 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.
The SEC also alleges that he misappropriated funds from the client that originated from 529-plan college savings accounts held at another financial institution for her grandchildren. The complaint alleges that Carter used the funds 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 announced criminal charges against Carter. Carter has pled guilty to those charges.
