RIA adviser gets two years in prison for cherry-picking trades

Michael Breton of Strategic Capital Management sentenced for $1.3 million fraud.
JUN 26, 2017

Michael J. Breton, an adviser at a Waltham, Mass.-based registered investment adviser, has been sentenced to two years in prison and two years of supervised release, and ordered to forfeit $1.33 million and pay restitution in the same amount in a criminal action for illegal cherry-picking. Mr. Breton pled guilty to one count of securities fraud on March 3. In January, the SEC charged Mr. Breton and his firm, Strategic Capital Management, with defrauding clients out of more than $1.3 million. It said Mr. Breton placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into client accounts. Mr. Breton allegedly purchased shares in publicly traded companies shortly before their earnings announcements and then allocated them after the announcements, according to the Justice Department, depending on whether the company had positive or negative earnings news. (More: SEC bars former Ameritas adviser after fraud trial finds him guilty) The SEC barred Mr. Breton from the securities industry on March 13. The SEC said its litigation against Mr. Breton and Strategic Capital continues.

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