The Investor’s Watchdog

The Investor's Watchdog

SEC Complaint Alleges Tennessee Investment Advisor Misappropriates Money from Elderly Family Member and Client Investment Funds to Pay for Lavish Lifestyle

Thursday, July 30, 2020

On July 20, 2020, the Securities and Exchange Commission (SEC) filed a Complaint against Michael Carter, a former investment advisor representative and registered representative residing in Knoxville, Tennessee, for allegedly misappropriating $6 million from brokerage customers from October 2007 through May 2019.

Carter was registered as a general securities representative with four brokerage firms during the alleged misconduct, including three firms located in Vienna, Virginia: Morgan Stanley & Co. Incorporated (April 2007 – June 2009); Morgan Stanley Smith Barney (June 2009 – May 2011); and Ameriprise Financial Services, Inc. (April 2011 – June 2011). Carter was most recently associated with Morgan Stanley in McLean, Virginia from December 2011 to August 2019, when he was discharged after allegations of misappropriation arose.

The SEC alleges in the Complaint that Carter misappropriated $2.5 million within the last five years and $6 million overall from his brokerage customers, including family and friends, and an elderly investment advisory client which he served as their financial advisor. Carter allegedly effected 60 unauthorized cash wire transfers by creating fictitious entities in the authorization forms as the beneficiary account holder from his customers’ bank account to his personal bank account. He allegedly provided fabricated account statements to these customers and had brokerage account documents forwarded to a P.O. box that he controlled or to email accounts that he created and controlled.

The SEC Complaint reveals that he allegedly depleted the account of an elderly family member and client by misappropriating at least $2.4 million through 28 unauthorized wire transfers between October 2007 and August 2014. In the case of a separate customer, Carter allegedly wrote himself a $56,000 check by forging a customer’s signature and depositing the check in a bank account at an entity he owned and controlled.

SEC seeks a final judgement for permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.

If you lost money due to Michael Carter’s alleged fraud, call us today at 1-877-410-8172 for a free consultation. We may be able to help you recover from Carter or Morgan Stanley, the brokerage firm where he was registered.

Author: Jason T. Albin

Jason Albin is an Attorney and Partner at ChapmanAlbin, the investor rights law firm. He has represented hundreds of investors who have lost money due to broker misconduct, unsuitable investment advice and fraud.​ Jason also represents individuals in “whistleblower” suits filed against unscrupulous companies that try to defraud the US federal and state governments.

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