SEC charges two Boston-area former Morgan Stanley reps with fraud

James Polese and Cornelius Peterson stole nearly $500,000 from clients, agency claims.

The Securities and Exchange Commission has filed an enforcement action in federal court in Boston, charging two former Morgan Stanley reps with stealing nearly half a million dollars of assets from several clients, along with other breaches of their fiduciary duty.

In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts announced criminal charges against James Polese and Cornelius Peterson. The two were dismissed by Morgan Stanley in June 2016.

According to the SEC’s complaint, beginning in 2014, the two brokers engaged in various schemes to defraud their clients, including stealing nearly $450,000 from one elderly client. According to the complaint, in March, the two fraudulently misappropriated $350,000 of their client’s money, using $100,000 of those funds to make investments in their own names, and directing the remaining $250,000 to Mr. Polese’s personal bank account. Then, from March through May of 2017, Mr. Polese made numerous unauthorized withdrawals from the same client’s account totaling approximately $93,000 to pay credit card and college tuition expenses.