Securities Arbitration Lawyer Blog
On October 28, 2021, the United States Securities and Exchange Commission (“SEC”) charged former Wells Fargo broker and investment advisor representative Kenneth Welsh with stealing nearly $3 million from his advisory clients and brokerage customers from January 2016 through January 2021. The SEC has accused Mr. Welsh of transferring funds that belonged to his clients and customers to himself and his family to purchase gold coins and other precious metals, buy luxury goods, and pay off personal credit cards.
Mr. Welsh was registered with Wells Fargo Clearing Services, LLC in Fairfield, NJ. Wells Fargo terminated Mr. Welsh’s employment in June 2021 after the allegations arose that Mr. Welsh misappropriated funds from Wells Fargo’s customers, including senior citizens.
Iorio Altamirano LLP is investigating potential legal claims on behalf of customers of Kenneth Welsh and Wells Fargo related to potential misconduct by Mr. Welsh.
Customers who have been harmed by Mr. Welsh should contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and to review their legal rights.
Securities and Exchange Commission v. Kenneth A. Welsh
On October 28, 2021, the SEC filed a complaint in the United States District Court of New Jersey alleging that Mr. Welsh violated Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Section 206(1) and (2) of the Investment Advisors Act of 1940.
Specifically, the SEC alleged:
- Between at least January 2016 and January 2021, Mr. Welsh used more than a hundred fraudulent Automated Clearing House (“ACH”) transactions to transfer funds from his clients’ and customers’ accounts to credit card accounts held in the names of his own wife and parents, which he used for his personal benefit.
- Welsh also caused numerous checks to be fraudulently drawn on his clients’ and customers’ accounts, which he secretly used to buy gold coins and other precious metals and to pay for his personal expenses.
- None of these transactions were knowingly authorized by his clients or customers, some of whom were elderly and financially unsophisticated.
- In many cases, Mr. Welsh intentionally circumvented Wells Fargo’s policies and procedures to carry out these transfers, including manually altering checks.
- Welsh frequently sold securities in his clients’ and customers’ accounts –sometimes only days before the fraudulent transfers – so that cash would be available in the accounts for him to steal. Mr. Welsh did not disclose to his victims that the purpose of these securities sales was to facilitate his scheme rather than to maximize their investment returns and total assets.
The SEC’s complaint seeks to permanently enjoin Mr. Welsh from violating federal securities laws and disgorge all ill-gotten gains he received, directly or indirectly, with pre-judgment interest.
Kenneth Andrews Welsh (CRD No. 4657872)
Mr. Welsh has 17 years of experience in the securities industry and has been associated with the following firms in Fairfield, NJ:
- Wells Fargo Clearing Services, LLC, from September 2012 to July 2021.
- Morgan Stanley Smith Barney, from March 2004 to October 2012.
Mr. Welsh was discharged by Wells Fargo after allegations were made that Mr. Welsh misappropriated funds from Wells Fargo’s clients.
According to his public disclosure report, Mr. Welsh has been the subject of at least four customer complaints:
- Customer Dispute (August 2021): In September 2021, a customer made an oral complaint that Mr. Welsh assured him that he would see a purchase of stock on his next account statement. However, the order was not filled in time. The matter was settled by Wells Fargo for monetary compensation.
- Customer Dispute (June 2021): A customer filed a written complaint alleging that funds were stolen by Mr. Welsh. The dispute is pending.
- Customer Dispute (June 2021): A customer filed a written complaint alleging that monies were withdrawn from her brokerage account without her authorization in 76 transactions over a 27-month period. The dispute is pending.
- Customer Dispute (April 2021): A customer filed a written complaint alleging that Mr. Welsh likely perpetrated a fraud on the client related to the alteration of checks, and payments and transfers from the client’s accounts. The dispute is pending.
FINRA’s BrokerCheck tool can be used to obtain Mr. Welsh’s complete and updated disclosure reports.
Wells Fargo – A Duty to Supervise
Financial institutions like Wells Fargo must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as excessive trading, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
How to Recover Financial Losses or Obtain a Free Consultation
If you have been harmed by Mr. Welsh, contact securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential review of your legal rights.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.