Chatham Firm To Pay $250K After Former Agent Defrauded Investors

CHATHAM, NJ — A Chatham-headquartered brokerage firm will pay a $250,000 settlement related to the misconduct of a former agent who has since been imprisoned, state officials announced. FCG Advisors, LLC, failed to "reasonably supervise" longtime agent Michal Allen Bressman, who defrauded his clients in a multi-year "cherry-picking" scheme, according to the Office of Attorney General.

The state barred Bressman from the securities industry following his conviction in August. Bressman was sentenced to two years in federal prison and 18 months of supervised release. He also must pay restitution of $793,680 and forfeit the same amount.

Bressman admitted to misusing his access to a designated FCG block trading "Allocation Account," obtaining nearly $800,000 in illicit profits in a six-year period ending February 2018.

The state Bureau of Securities found that FCG had no written policies or procedures in place to detect and prevent fraudulent "post-execution" allocation of trades — a failure to reasonably supervise the agent as required by law, the OAG said.

“Brokerage firms have a legal obligation to reasonably supervise the conduct of their agents to prevent them from fraudulently reaping profits at their clients’ expense,” said Attorney General Gurbir S. Grewal. “FCG’s failure to fulfill that obligation allowed their agent to carry out his illegal scheme undetected for years, causing significant financial harm to investors.”

The agent used the Allocation Account to place trades and then — based off a stock's performance over the day — fraudulently divert profitable trades to himself and family members, the OAG said. He also assigned unprofitable trades to his customers, according to state officials.

Bressman placed about 5,000 trades from the Allocation Account, using an online trading platform provided to FCG's clearing firm, according to authorities. The delay in making an allocation enabled Bressman to watch how the stock performed in the hours after the trade before deciding how to allocate it.

Further investigation revealed that FCG failed to make and keep accurate books, which violates securities law, the OAG said. The company will pay $200,000 to victim investors and a $50,000 civil penalty.

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