Ex-Morgan Stanley broker sentenced to 5 years over $6 million fraud

Rick Steves

U.S. District Judge Paul W. Grimm ordered Mr. Carter to pay $4,355,110.39 as he had already returned $1,794,052.38 to the victims even before being discovered.


Michael Barry Carter, a 47-year-old former financial advisor at Morgan Stanley, was sentenced to five years in federal prison, followed by three years of supervised release.

He was found guilty of wire fraud and investment adviser fraud related to a scheme to steal more than $6 million.
U.S. District Judge Paul W. Grimm ordered Mr. Carter to pay $4,355,110.39 as he had already returned $1,794,052.38 to the victims even before being discovered.

Acting U.S. Attorney Jonathan F. Lenzner said: “For more than 12 years, Michael Carter perpetrated a brazen scheme that defrauded victim account holders at a global bank of their life savings. When his fraud was discovered, Carter repaid some victims by stealing money from other victim accounts, and ultimately he stole close to $5 million.

“This case reflects the reality that large-scale fraud can still occur at a global institution with a robust compliance program, and it also reflects our commitment to holding bad actors accountable in order to provide restitution to victims and restore confidence in our system.

“The U.S. Attorney’s Office will continue to work closely with our federal law enforcement partners and the Securities and Exchange Commission to hold accountable financial advisors who defraud victims whose investments they are supposed to protect”, said Mr. Lenzner.

In July 2020, Mr. Carter pled guilty of making numerous unauthorized transactions from the victim accounts for his personal benefit, defrauding five customers of at least $5 million. The fraud lasted from at least October 2007 to at least July 2019, according to the statement of facts.

To go through with the wire fraud at Morgan Stanley, Mr. Carter submitted an internal bank authorization form that falsely stated that he had received verbal client instructions from each victim authorizing the transfer.

The transfers would then be sent to his personal accounts and the money was used to pay for his lifestyle expenses, including Carter’s mortgage, credit card bills, and country club membership fees.

The fraud was first discovered when one victim and her adult daughter attempted to obtain a loan from the bank only to find out that an $800,000 loan had already been obtained in the victim’s name without the victim’s knowledge.

Morgan Stanley then found the loan proceeds went to Mr. Carter’s personal bank account. Later, the bank discovered he had transferred approximately $5 million in unauthorized funds associated with clients of the financial institution, which then fired the fraudster.

According to the plea agreement, Mr. Carter made at least 53 unauthorized transfers from his clients’ accounts to his own accounts during the course of the scheme.

Read this next

Metaverse Gaming NFT

DCentral Miami brings together all of Web3, NFT, DeFi, Metaverse

The world’s biggest Web3 meeting entitled DCENTRAL Miami is set to take place November 28-29, featuring a lineup of some of the biggest and most influential names in the blockchain space.

Digital Assets

Crypto ban expands across UK banks as Starling joins ‎crackdown

UK digital bank Starling has banned ‎all customer payments related to cryptocurrencies, another blow for the crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎


Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.


FIA Expo 2022: TNS addresses public cloud limitations with hybrid infrastructure

November is the month of the FIA Expo, one of the largest futures and options conferences in the world, bringing together regulators, exchanges, software vendors, and brokers in one place: the Sheraton Grand Chicago Riverwalk. 

Retail FX

Italy’s regulator blacks out Finance CapitalFX, MFCapitalFX

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

Suspected leader of Honk Kong ramp-and-dump scam appears in court

A leader of a sophisticated ramp-and-dump scheme made his first court appearance in a Hong Kong court today, charged with market manipulation and various criminal offences. The case stems from an earlier joint operation of Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), and the local police. 

Institutional FX

Cboe’s James Arrante discusses growing demand for fixed income, FX algo

We caught up with James Arrante, senior director of FX & US treasuries product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed income markets and learn more about the bourse operator’s recent initiatives.

Retail FX

Eurotrader acquires UK broker Petra Asset Management

Eurotrader Group has formally entered into the UK market with the acquisition of FCA-regulated broker, previously named Petra Asset Management Ltd. The new entity operates under the brand name Eurotrade Capital Ltd.

Inside View, Retail FX

The Game of Chess Continues – OPEC, China and the Oil Market

Over the past decade, the US has been complaining about the amount of power which the BRIC group, and specifically China, has on the global economy. BRIC stands for Brazil, Russia, India and China; these were the world’s fastest growing economies. Only in the past 10 months, the US has turned their attention toward OPEC due to the prices of fuel. Nevertheless, China seems to have a strong influence even over the price of crude oil.