According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Michael Carter (Carter), previously associated with Morgan Stanley, has at least 4 disclosable events. These events include one customer complaint, 3 regulatory events, alleging that Carter recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on July 02, 2021.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (‘Exchange Act’) and Section 203(f) of the Investment Advisers Act of 1940 (‘Advisers Act’) against Michael Barry Carter (‘Carter’ or ‘Respondent’). The Commission finds that Carter was employed by Financial Institution A as an investment adviser representative and registered representative in McLean, VA from August 2006 until April 2011 and again from November 2011 until he was terminated in July 2019 in connection with the conduct described herein. Financial Institution A is an investment adviser and broker dealer registered with the Commission. Carter, 46 years old, is a resident of Knoxville, Tennessee. On June 30, 2021, a final judgment was entered by consent against Carter, permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Michael Barry Carter, Civil Action Number 20-cv-2112, in the United States District Court for the District of Maryland. The Commission’s complaint alleged that from approximately October 2007 through May 2019, Carter misappropriated approximately $6 million from brokerage customers and an elderly investment advisory client while he served as their financial advisor at Financial Institution A. The complaint alleged that Carter carried out his scheme by falsifying internal forms to effect approximately 60 unauthorized cash wire transfers from the customers’ and client’s accounts to his personal bank account at another financial institution. On July 20, 2020, Carter pled guilty to Wire Fraud and Investment Advisers Fraud before the United States District Court for the District of Maryland, in United States v. Michael Barry Carter, Crim. No. 20-cr-151. On March 29, 2021, a judgment in the criminal case was entered against Carter. He was sentenced to a prison term of 60 months followed by three years of supervised release and ordered to make restitution in the amount of $4,355,110.39. The counts of the criminal information to which Carter pled guilty alleged, inter alia, that Carter misappropriated over $6 million from customers and clients while he served as their financial advisor, by effecting numerous unauthorized transactions from their accounts
FINRA BrokerCheck shows a final customer complaint on October 15, 2020.
Respondent violated the antifraud provisions of section 11-301 of the Securities Act by, among other things, misappropriating millions of dollars from his clients’ accounts for his own personal benefit, misrepresenting or omitting to disclose material facts to his clients and falsifying his clients’ account statements. Respondent violated the dishonest and unethical provisions of section 11-306 of the Securities Act by, among other things, misappropriating millions of dollars from his clients’ accounts for his own personal benefit.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $73,458.00 on June 12, 2020.
Client’s attorney alleges, inter alia that funds were misappropriated from the client’s account and that shares of stock were sold without authorization. 2015 – 2016
FINRA BrokerCheck shows a final customer complaint on February 28, 2020.
Respondent Carter failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
When your financial advisor is providing advice they must adhere to the SEC’s Regulation Best Interest (Reg BI) rule and standard of care. Reg BI replaced the former “suitability” rule and created a ‘best interest’ standard for brokerage firms and registered representatives. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. The Reg BI rule applies a fiduciary principles and requires an associated person to act in the retail investor’s “best interests” while barring the broker from placing their own financial interests and compensation incentives ahead of the investor’s best interest. Reg BI comes with different key obligations that associated persons must meet in dispensing advice. The care obligation requires registered representatives to carefully evaluate investment options, review the risks and rewards of the investment or service, compare similar products, and ensure that the recommended investment is appropriate for the customer and in the retail investor’s best interest.
Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest. An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Carter has been in the securities industry for more than 18 years. Carter has been registered as a Broker with Morgan Stanley since 2011.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.