SEC Action and Criminal Charges Brought Against Michael Barry Carter of Morgan Stanley

On July 20, 2020, the Securities and Exchange Commission brought investment advisor and former registered representative Michael “Barry” Carter up on multiple federal charges relating to the alleged misappropriation of over $6 million in funds.  Mr. Carter allegedly stole this money from his brokerage customers, including nearly $1 million from one elderly client, defrauding them in the process in an effort to remain undetected.  His alleged fraudulent acts occurred between the fall of 2007 and spring of 2019 while working at Morgan Stanley, with over 40% of the misappropriation occurring in the last five years, all to sustain his extravagant lifestyle.

Mr. Carter was reportedly fired from Morgan Stanley in the summer of 2019 for misappropriation of funds.  Later that fall, FINRA launched an investigation into his alleged crimes and he was then barred by FINRA for refusing to turn over documents relating to the alleged misappropriations.

Additionally, the state of Maryland reportedly brought criminal charges against Mr. Carter, to which he has already pled guilty to the investment advisory fraud charges and wire fraud; as part of his plea agreement he will, according to prosecutors, be required to pay back about $4.3 million, the total net proceeds of his illegal activities.

Like many investment advisors that are found to have committed fraud, Mr. Carter’s alleged victims run the gambit, including friends who trusted him and those with family ties to him. The defendant apparently concealed his behavior by creating fake account statements for his victims and diverting the real ones to addresses that he controlled.  Knowing who the alleged victims are and the lengths to which Mr. Carter went to conceal his true actions should serve as a reminder and cautionary tale to other investors to remain aware and vigilant regarding the status of their investments.  Investors should keep an eye out for red flags like those listed by the SEC on its website, which caters to retail investors when making investment decisions.  Unfortunately, it is sometimes almost impossible to know that one has become the victim of a Ponzi scheme, such as the one Mr. Carter allegedly conducted, until it is too late and some or all of one’s investments are lost. However, brokerage firms like Morgan Stanley have regulatory and supervision rules that may place them on the hook for the investor losses.  Malecki Law has handled many such cases.

In the instant case, the SEC is asking the court for injunctive relief, the return of all of the funds allegedly stolen (with interest), and an additional civil penalty, that treasury can choose to use to help make the defendant’s alleged victims whole again.

That said, it is not always easy for victims of Ponzi schemes to recoup their losses.  In the more than 10 years since charges were brought against Bernie Madoff, in what was objectively the largest and most infamous, modern-day Ponzi scheme, investors have lost over $31 billion to other Ponzi schemes, a 300% increase over the prior decade.  The SEC has increased the number of these types of cases they prosecute by over 50%, but prosecution of the perpetrator does not guarantee that the victims will recoup anything substantial from the government actions.  Through civil lawsuits, Malecki Law has taken numerous brokerage firms to FINRA arbitration and successfully recouped millions of dollars for victimized Ponzi investors.

It is imperative that victims of these types of fraud seek legal representation and help to navigate the confusing world they will undoubtedly be brought into through no fault of their own.  New York Securities attorney Jenice Malecki has vast knowledge regarding Ponzi schemes, having provided her insight on them to American Greed, CNBC’s white-collar crime show.  Ms. Malecki and her team have recovered tens of millions of dollars for victims of Ponzi schemes and secured tens of millions of dollars in settlements for other types of securities fraud as well.  For more information about Ponzi schemes or other securities frauds, call to have a free consultation with one of our highly rated securities attorneys.

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