The Securities and Exchange Commission charged a New Jersey-based broker Wednesday with "cherry-picking" profitable trades for himself and his family at the expense of his clients, a practice that netted him $700,000.
Meanwhile, the U.S. Attorney's Office for the District of Massachusetts also announced criminal charges against the broker.
The
SEC Market Abuse Unit, which used data analysis to expose the fraud, alleged that Michael A. Bressman had been misusing his access to client accounts since January 2012 until February of this year. For those six years, he acted as a broker to more than 60 individuals and families.
Neither Mr. Bressman nor his attorney could be reached for comment.
According to the SEC, Mr. Bressman placed approximately 5,000 trades over six years using an allocation account. After determining which stocks were profitable, Mr. Bressman would deposit the winning trades into his own personal account or to an account held by his sister-in-law and her husband and close out his position to keep his gains.
For example, in 2014, the SEC said that Mr. Bressman executed a winning trade in pharmaceutical company Baxalta Inc. that he allocated to himself and his family, realizing a net gain of $10,000. His clients didn't share in that gain.
Stocks that were unprofitable were disproportionately deposited into his clients' accounts, the SEC said. His clients, comprising mostly individual investors, had modest investment portfolios.
For violating anti-fraud provisions, the SEC is seeking the return of allegedly ill-gotten gains plus interest, civil penalties and a permanent injunction.
(More: SEC orders new enforcement hearings as a result of Supreme Court ruling)
