Michael J. Breton, a Massachusetts investment adviser who the SEC accused of securities fraud, has agreed to be banned from the industry after the SEC discovered he was operating an illicit cherry-picking stock scheme. The commission filed suit against Breton and his firm, Strategic Capital Management, in federal district court in Massachusetts. claiming that they bilked customers out of about $1.3 million.
Between 2011 and July 2012, Michael J. Breton made trades via a master brokerage account and then allocated profitable trades to himself while putting non-profitable trades into client accounts, according to the SEC.
Breton further entered a plea agreement to a charge of securities fraud brought by the Justice Department and to pay a forfeiture of $1.3 million. The U.S. Attorney’s Office has agreed to recommend a sentence of no greater than three years in prison.
The Justice Department asserts that Breton bought stock in exchange traded companies just prior to their earnings announcements and then allocated the stocks after those announcements. He allocated the shares to one of his accounts or to client accounts after knowing whether the company had announced positive or negative news about its earnings, which determined whether the trade was likely to be profitable in the short term, according to the Justice Department.
Over the course of the scheme, Breton allocated more-profitable trades to himself and unprofitable trades to his clients, thereby stealing more than $1.3 million in potential profits from clients, the Justice Department stated.
Fraud can take many different forms. No two schemes are the same. If you believe you have been defrauded by a broker, you may have legal recourse, and we are here to help. Please contact Richard Frankowski today at 888-741-7503 to discuss your potential legal remedies or complete the contact form for a free consultation.