UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Michael Barry Carter ("Carter" or "Respondent"). The Commission finds that Carter was employed by Financial Institution A as an investment adviser representative and registered representative in McLean, VA from August 2006 until April 2011 and again from November 2011 until he was terminated in July 2019 in connection with the conduct described herein. Financial Institution A is an investment adviser and broker dealer registered with the Commission. Carter, 46 years old, is a resident of Knoxville, Tennessee. On June 30, 2021, a final judgment was entered by consent against Carter, permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Michael Barry Carter, Civil Action Number 20-cv-2112, in the United States District Court for the District of Maryland. The Commission's complaint alleged that from approximately October 2007 through May 2019, Carter misappropriated approximately $6 million from brokerage customers and an elderly investment advisory client while he served as their financial advisor at Financial Institution A. The complaint alleged that Carter carried out his scheme by falsifying internal forms to effect approximately 60 unauthorized cash wire transfers from the customers' and client's accounts to his personal bank account at another financial institution. On July 20, 2020, Carter pled guilty to Wire Fraud and Investment Advisers Fraud before the United States District Court for the District of Maryland, in United States v. Michael Barry Carter, Crim. No. 20-cr-151. On March 29, 2021, a judgment in the criminal case was entered against Carter. He was sentenced to a prison term of 60 months followed by three years of supervised release and ordered to make restitution in the amount of $4,355,110.39. The counts of the criminal information to which Carter pled guilty alleged, inter alia, that Carter misappropriated over $6 million from customers and clients while he served as their financial advisor, by effecting numerous unauthorized transactions from their accounts

Order

Bar (Permanent)

All capacities

indefinite

7/2/2021

participation in an offering of penny stock

indefinite

7/2/2021

Maryland

Respondent violated the antifraud provisions of section 11-301 of the Securities Act by, among other things, misappropriating millions of dollars from his clients' accounts for his own personal benefit, misrepresenting or omitting to disclose material facts to his clients and falsifying his clients' account statements. Respondent violated the dishonest and unethical provisions of section 11-306 of the Securities Act by, among other things, misappropriating millions of dollars from his clients' accounts for his own personal benefit.

Consent

Bar (Permanent)

Broker-dealer, Agent, Investment Adviser, Investment Adviser Representative

12/15/2020

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$220,000.00

Revocation

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission (the "Commission"), for its Complaint against defendant Michael Carter ("Carter" or "Defendant"), alleges that, from approximately October 2007 through May 2019, he misappropriated approximately $6 million from brokerage customers and an elderly investment advisory client while he served as their financial advisor at a large financial institution registered with the Commission as broker-dealer and investment adviser ("Financial Institution A"). Of that sum, Carter misappropriated approximately $2.5 million in the last five years. Carter's victims include people close to him who knew and trusted him through familial ties and friendship. Carter carried out his scheme by falsifying internal forms to effect approximately 60 unauthorized cash wire transfers from the customers' and client's accounts to his personal bank account at another financial institution ("Financial Institution B"). Carter concealed his fraud from the investors by providing them with fake account statements that he fabricated, diverting their real account statements and other correspondence to post office boxes that he controlled or to a false email address that he created, and by making misrepresentations to them concerning their securities investments. Carter used the funds that he misappropriated from the investors to support his lifestyle, which included hundreds of thousands of dollars of credit card bills, thousands of dollars of cash withdrawals, payments for a substantial home mortgage, and a luxury car. By virtue of the foregoing conduct and as alleged further herein, Carter has violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 206(1) and Section 206(2) of the Investment Advisers Act of 1940 ("Advisers Act").

Judgment Rendered

Disgorgement

$4,010,568.39

Monetary Penalty other than Fines

Injunction

CLIENT'S ATTORNEY ALLEGES, INTER ALIA THAT FUNDS WERE MISAPPROPRIATED FROM THE CLIENT'S ACCOUNT AND THAT SHARES OF STOCK WERE SOLD WITHOUT AUTHORIZATION. 2015 - 2016

$73,458.00

$16,731.00

FINRA

Respondent Carter failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.

Letter

Suspension

All Capacities

Indefinite

Continues until required payment is made or discharged.

2/28/2020

Pursuant to Article VI, Section 3 of FINRA By-Laws, and FINRA Rule 9554, Respondent Carter is suspended on February 28, 2020 for failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.

Complaint from client's attorney alleging misappropriation by former FA from client's account. 10/01/2012-07/31/2019

$6,838,155.55

$1,300,000.00

Client did not authorize withdrawals in the account that took place between 2/2007-08/2014.

$4,000,000.00

$3,193,500.00

Client was unaware of withdrawals in the account that took place between 6/2015 AND 9/2017.

$676,174.01

FINRA

Without admitting or denying the findings, Carter consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA during the course of an investigation initiated after FINRA received an external tip relating to allegations of misconduct that were ultimately contained in a Form U5 filed by his member firm.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All capacities

Indefinite

9/9/2019

Client's POA agent verbally alleged that a Liquidity Access Line was opened without authorization and certain withdrawals were unauthorized - December 2017 through May 2019.

$1,357,841.68

1.MSWM

Discharged

FA was terminated after allegations he misappropriated client funds.