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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23779 / March 15, 2017

Securities and Exchange Commission v. Strategic Capital Management, LLC and Michael J. Breton, No. 1:17-cv-10125 (D. Mass. filed Jan. 25, 2017)

United States v. Michael J. Breton, No. 1:17-cr-10017 (D. Mass.)

SEC Obtains Judgment Against Former Investment Adviser Charged in Cherry-Picking Scheme; Adviser Pleads Guilty in Parallel Criminal Action

On March 3, 2017, Massachusetts-based investment adviser Michael J. Breton pled guilty in federal district court in Massachusetts to one count of securities fraud in connection with an illegal cherry-picking scheme. Breton is currently scheduled to be sentenced in the criminal case in May 2017.

The criminal charge arises from the same conduct alleged in a related SEC civil enforcement action filed on January 25, 2017. The SEC's complaint alleges that Breton and Strategic Capital Management, LLC defrauded clients out of more than $1.3 million. Breton allegedly placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into the client accounts.

Breton and Strategic Capital consented to the entry of a final judgment that permanently enjoined them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and, on February 17, 2017, the court entered a partial judgment by consent against Breton and his firm, Strategic Capital Management, LLC. The court will decide whether to order monetary sanctions at a later date. The SEC's complaint seeks disgorgement plus prejudgment interest and civil penalties.

 

https://www.sec.gov/litigation/litreleases/2017/lr23779.htm


Modified: 03/15/2017