SEC Obtains Final Judgement Against Former LPL Advisor Who Defrauded Clients of $2.9 Million
The U.S. District Court for the District of Massachusetts entered a final judgment against Massachusetts-based investment adviser James K. Couture in connection with the SEC’s allegations that he engaged in a deceptive scheme to misappropriate a total of approximately $2.9 million from unsuspecting clients.
As The DI Wire previously reported, Couture, a registered investment adviser and former LPL broker, pled guilty to four counts of wire fraud, four counts of aggravated identity theft, one count of investment adviser fraud and one count of witness tampering.
The SEC’s complaint filed in June 2021 charged 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 in order to fund large money transfers to an entity that, unbeknownst to his clients, Couture owned and controlled. According to the complaint, for each transaction, Couture obtained client authorization by falsely claiming that the proceeds would be reinvested for the clients’ financial benefit. The SEC says, in reality, Couture’s alleged purpose in arranging these transactions was to divert the sale proceeds for his own benefit. When clients requested withdrawals, the complaint alleged that Couture took assets from his other advisory clients 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.
Pursuant to the final judgment, to which Couture consented, Couture was permanently enjoined from future violations of the SEC’s antifraud provisions.
In a parallel action by the U.S. Attorney’s Office for the District of Massachusetts, Couture pleaded guilty to ten criminal counts including one count of investment adviser fraud. On Jan. 11, 2023, Couture was sentenced to 100 months in prison followed by three years of supervised release and was ordered to pay $1.9 million in restitution and $2.9 million in forfeiture.
The SEC previously issued an order barring Couture from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization, as well as participating in the offering of a penny stock.
According to his BrokerCheck profile, Couture spent 11 years at LPL before being discharged in June 2020 for allegedly altering customer account statements, maintaining commingled customer funds, and using an unapproved email address. He was barred by FINRA in October of that year for refusing to comply with the regulator’s requests for information related to their investigation into his termination from LPL.
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