Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Investor Protection

Morgan Stanley Broker Stole Millions from Friends, Family

August 5, 2020

by Howard Haykin



Michael Carter, a broker/financial advisor with Morgan Stanley, is said to have misappropriated around $6 million from 5 investors – people who knew and trusted him through familial ties and friendship.  Over a 12-year period, Carter concealed his fraud largely by providing investors with fake account statements, while diverting their real account statements and other correspondence to post office boxes he controlled or to a false email address he created.



THE VICTIMS.    According to the SEC … “Investor A” (elderly and with familial ties to Carter) thought her brokerage account was fully invested in tax-free 6% U.S. bonds when, in reality, Carter completely depleted her $2.4 million without her knowledge or consent. “Investors B-C-D” (all of whom were friends of Carter) thought their funds were fully invested in securities. Yet, Carter regularly sold their securities without authorization and misappropriated a total of $1.9 million from their brokerage accounts. “Investor E” (elderly investor) had $1.5 million ‘robbed’ from her advisory accounts. An additional $835,000 was withdrawn from a Morgan Stanley Loan Account that Carter established in Investor E’s name without her knowledge or authorization. Around $600,000 of these funds were used to repay funds that Carter had taken from Investor B.



THE CONCEALMENT.    For the most part, Carter diverted actual Morgan Stanley account statements and other documents to a post office box that he controlled or to email accounts that he created. Carter added the post office boxes to each customer’s New Account application form. Carter then provided all investors with fake account statements that he created - omitting all wire transfers and showing inflated account balances and securities holdings that did not exist. For Investor A, Carter continued to send fake account statements until March 2019, even though her account was depleted and closed in September 2014. Additionally, Carter provided each Investor with fraudulent year-end consolidated tax statements that falsified her investment income.



INVESTOR TAKE AWAYS.    It’s troublesome that Morgan Stanley seemingly enabled the use of a post office box for mailing of customer account statements and other correspondence - without taking or having appropriate steps to ferret out the fraud. However, since fraudsters usually figure out a way to scheme the system, investors are encouraged to have (and utilize) alternative means for verifying the activities in their brokerage and advisory accounts.


  • One such approach would be to gain internet access and periodically inspect the account for large or unusual transactions.
  • A second approach would be to periodically call a customer service representative to ask about account balances and to identify recent transactions.
  • A third approach would entail hiring an independent and trustworthy Financial Watchdog - someone who can provide a second set of eyes and ears over financial accounts.



[For further details, click on … SEC Press Release and SEC Complaint.]