Litigation Release No. 25135 / July 2, 2021
Securities and Exchange Commission v. Michael B. Carter,
SEC v. Carter, 20-cv-02112 (D. Md.) SEC Obtains Final Judgment Against Financial Advisor Who Misappropriated Over $6 Million from Elderly and Other Investors
On June 30, 2021, the U.S. District Court for the District of Maryland entered a final consent judgment against Michael B. Carter, whom the SEC previously charged with securities fraud and investment adviser fraud for having misappropriated customer and client funds.
According to the SEC’s complaint, filed on July 20, 2020, Carter, while employed at a major financial institution, misappropriated more than $6 million from elderly and other investors, primarily by making unauthorized cash wire transfers from their accounts. Carter allegedly used the money to support his lifestyle, including payments for a large home mortgage and a luxury car, and to fund cash withdrawal requests made by customers whose accounts Carter had previously depleted.
In a parallel criminal action, the U.S. Attorney’s Office for the District of Maryland filed criminal charges against Carter. Carter pled guilty to those charges and was sentenced to a prison term of 60 months and ordered to pay forfeiture and restitution.
The final judgment enjoins Carter from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The final judgment further finds Carter liable for disgorgement in the amount of $4,010,568.39 and prejudgment interest in the amount of $225,393.52, for a total amount of $4,235,961.91. These amounts were deemed satisfied by the restitution ordered against him in the parallel criminal action.
Carter also consented to a Commission order, issued today, permanently barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, as well as permanently barring him from participating in any offering of penny stock.