An investment adviser has pled guilty to SEC allegations that he made more than $1 million by pocketing profitable trades and funneling losing trades into client accounts.
Michael Breton, founder of Strategic Capital Management LLC, admitted he defrauded more than 30 clients over a six-year period by waiting until after the market closed to see if stock values increased or decreased before deciding to keep the trades himself or assign them to clients. This action is a breach of Breton’s fiduciary duty.
According to the SEC, Breton knew or should have known that he was not allowed to do what he did. The SEC further stated that he would invest in public companies on the day they were set to release earnings reports after market hours.
He then assessed the impact of the earnings reports, distributing stocks that increased in price into his account and spreading unprofitable stock trades among various clients. Breton “cherry picked” more than 200 lucrative trades for himself and placed more than 200 bad trades into client accounts, netting more than $1.3 million in profit. He also made misleading statements to his clients, assuring investors that his personal transactions would never put them at a disadvantage.
The SEC claimed that Breton “intended to lull clients into a false sense of security and prevent clients from learning that Breton and SCM routinely breached their fiduciary duties by conducting a fraudulent cherry-picking scheme.”
Call a Los Angeles Stockbroker Fraud Attorney Today
If you invested with Michael Breton or Strategic Capital Management LLC, or suffered a loss through a similar experience with your broker or brokerage firm in a possible cherry-picking scam, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles stockbroker fraud attorney today for a consultation to discuss your rights and options.