A Massachusetts investment advisor has been sentenced to two years in prison and two years of supervised release for engaging in an illegal cherry-picking scheme.
Michael J. Breton was sentenced on June 21 by U.S. District Judge Allison D. Burroughs and was also ordered to pay $1.3 million in restitution to defrauded clients.
The SEC previously charged Breton and his firm Strategic Capital Management LLC on Jan. 25. Breton allegedly placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into the client accounts, according to the complaint.
Cipperman Compliance Services notes that in January, the SEC included 10b-5 charges to allow for criminal prosecution, and the strategy appeared to be "successful as the defendant faces two years behind bars."
Joseph Sansone, co-chief of the SEC Enforcement Division's Market Abuse Unit, said in January that Breton "assured clients that he would put their interests first but did just the opposite, taking the firm's most profitable trades for himself and dumping the losing trades on his clients."
The SEC's "probing analytical work will continue to root out investment advisors who subject their clients to cherry-picking."
