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SEC charges US adviser in $1.3m ‘cherry picking’ scheme

By Kirsten Hastings, 26 Jan 17

The US Securities and Exchange Commission has charged an adviser with placing trades through a master brokerage account and allocating profitable trades to himself while passing unprofitable trades on to client.

The US Securities and Exchange Commission has charged an adviser with placing trades through a master brokerage account and allocating profitable trades to himself while passing unprofitable trades on to client.

Michael Breton allegedly defrauded at least 30 clients out of around $1.3m (£1m, €1.2m) during a six-year period.

Breton and his firm, Strategic Capital Management, have agreed to a partial settlement subject to court approval.  Monetary sanctions are to be determined at a later date.

Breton has also consented to an SEC order barring him from the securities industry.

In a parallel action, however, the US Attorney’s Office for the District of Massachusetts announced criminal charges against Breton on Wednesday.

Dump losing trades

“As alleged in our complaint, Breton assured clients that he would put their interests first but did just the opposite, taking the firm’s most profitable trades for himself and dumping the losing trades on his clients,” said Joseph Sansone, co-chief of the SEC Enforcement Division’s Market Abuse Unit. 

“Our probing analytical work will continue to root out investment advisers who subject their clients to cherry-picking.”

Click through to the next page to find out how the scheme worked…

 

Pages: Page 1, Page 2

Tags: Fraud | SEC

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International Adviser covers the global intermediary market that uses cross-border insurance, investments, banking and pension products on behalf of their high-net-worth clients. No news, articles or content may be reproduced in part or in full without express permission of International Adviser.