The Securities and Exchange Commission charged a New Jersey-based broker with misusing his access to customers’ brokerage accounts to enrich himself and family members at the expense of his customers, many of whom had entrusted him with their retirement accounts. The SEC uncovered the alleged fraud with data analysis used to detect suspicious trading patterns. In a parallel action, the US Attorney’s Office for the District of Massachusetts today announced criminal charges against Bressman.
“SEC data analysis played an important role in identifying the alleged securities law violations,” said Joseph Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit, in a statement. “We will continue to develop and use data analytics to root out cherry-picking and other frauds.”
The SEC filed fraud charges in federal district court against Michael Bressman, alleging that he misused his access to an omnibus or “allocation” account to obtain at least $700,000 in illicit trading profits over a six-year period ending in February. The SEC’s complaint alleges that Bressman placed trades using the allocation account and cherry-picked profitable trades, which he then transferred to his own account and the account of two family members while placing unprofitable trades in other customers’ accounts. The regulator is seeking return of allegedly ill-gotten gains, plus interest, penalties and a permanent injunction.