Former Morgan Stanley Broker Michael Barry Carter Accused of Misappropriating $6 Million of Clients’ Funds
Michael Barry Carter, a broker previously registered with Morgan Stanley and Ameriprise Financial Services, and several other firms, has been the subject of three regulatory proceedings, five customer complaints, and one termination, according to Financial Industry Regulatory Authority’s (FINRA) BrokerCheck.
Regulatory Events Involving Michael Barry Carter
BrokerCheck reports that on three occasions, Carter has been subject to regulatory actions.
Actions Initiated by Maryland
In October 2020, when Carter worked for Morgan Stanley, the State of Maryland sought sanctions against the broker for his alleged misappropriation of millions of dollars from client accounts for his own personal benefit, failure to disclose information to his clients, and falsification of account statements. These actions would be in violation of the Securities Act’s antifraud provisions (section 11-301) and dishonest and unethical provisions (section 11-306).
The event ended with Carter’s being permanently barred. A cease and desist was ordered, and civil and administrative penalties of $220,000 were assessed. However, a restitution order resulted in a waiving of the civil monetary penalty.
Actions Initiated by FINRA
In February 2020, FINRA sought Carter’s suspension for his alleged failure to comply with an arbitration award or settlement agreement or failing to fulfill the agency’s request for information regarding Carter’s status of compliance. The broker was indefinitely suspended.
In a prior action (September 2019), FINRA had received a tip accusing Carter of misconduct evidenced in a Form U5 that Morgan Stanley had filed. During the course of FINRA’s investigation of the allegations, the agency requested that Carter provide details and documents, which he failed to provide. The matter resulted in Carter being indefinitely barred.
Civil Court Action Against Carter
The United States Securities and Exchange Commission (SEC) initiated civil action against Carter in July 2020. The action, which is still pending, is being heard by the U.S. District Court for the District of Maryland. The SEC claims that in his role as a financial advisor, Carter misappropriated around $6 million from his clients. The alleged victims consisted of Carter’s family and friends, from whom the broker is claimed to have conducted around 60 unauthorized cash wire transfers from his clients to his personal bank account. Carter allegedly covered up the dealings by falsifying account statements and used the money to support his lavish personal lifestyle.
Customer Disputes Against Carter
Carter’s BrokerCheck record details five settled customer disputes that allege the broker misappropriated funds from clients’ accounts and unauthorized withdrawals. The complaints were received by FINRA between September 2019 and June 2020 and were settled for amounts ranging from $16,731.00 to $3,193,500.00.
Carter was discharged from Morgan Stanley on July 30, 2019 based on the allegations that he had misappropriated client funds.
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