Waltham Financial Advisor to Plead Guilty to Defrauding Clients

WALTHAM, MA – A Waltham financial advisor will plead guilty to defrauding his clients in what prosecutors called a multi-year "cherry-picking" scheme.

Michael Breton, 53, managing partner of investment advisory firm Strategic Capital Management, LLC, will admit to securities fraud, the U.S. Attorney's Office announced Wednesday.

Authorities allege that from 2011 through at least July 2016, Breton, using a master brokerage account, routinely purchased shares in publicly traded companies the day they announced earnings from the previous quarter. The purchases were allegedly made before the earnings announcements and then allocated following the announcements.

In doing so, Breton allocated the shares to one of his accounts or his client accounts after learning the earnings news, which determined whether the trade was likely short-term profitability of the trade.

He allocated more profitable trades to himself and allocated unprofitable trades to his clients, stealing more than $1.3 million in potential profits from his clients, the US. Attorney's Office said.

"Motivated by greed, Mr. Breton used his clients’ trust against them," Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, said in a statement. "By making the conscious decision to place his own interests above theirs, his behavior undermined the financial security of hard-working individuals. The FBI will do everything it can to protect investors, while rooting out fraud like this."

Breton has agreed to plead guilty and pay $1,326,696; prosecutors have recommended a sentence of no greater than three years in prison.

"Investment advisory clients, by necessity, entrust their advisors with great discretion over their life savings," said Acting United States Attorney William D. Weinreb in a statement. "As today’s charges demonstrate, when advisors abuse that trust—by stealing from their very own clients—they will be held criminally accountable."

The Securities and Exchange Commission on Wednesday filed a parallel civil action against Breton, who has agreed to partially resolve the claim by, among other stipulations, accepting an SEC order permanently barring him from working in the securities industry.

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