Financial Advisor Kenneth Welsh Charged by the SEC for Theft

• December 12, 2024
• Wells Fargo Advisors

Kenneth A. Welsh (CRD#: 4657872) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 2004 and previously worked with Morgan Stanley; Morgan Stanley & Co. Incorporated; and Wells Fargo Clearing Services, LLC.
Allegations of Misconduct

According to publicly available records released by the U.S Securities and Exchange Commission (SEC), on October 28, 2021, the U.S. Securities and Exchange Commission charged a former New Jersey broker and investment adviser representative with stealing nearly $3 million from his advisory clients and brokerage customers, which he used to buy gold coins and other precious metals, and funneled to family credit card accounts that he controlled.

The complaint alleges that from January 2016 to January 2021, Welsh transferred funds from his clients’ and customers’ accounts to pay off balances in credit card accounts held in the names of his wife and parents. Welsh also allegedly caused checks to be fraudulently drawn on his clients’ and customers’ accounts. The complaint alleges that Welsh made at least 137 fraudulent transactions, and used the stolen funds to purchase gold coins and other precious metals, buy luxury goods, and make electronic fund transfers to himself. The complaint seeks injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey announced criminal charges against Welsh.

For a copy of the SEC Complaint, click here.

For a copy of the SEC Litigation Release, click here.

In addition, Kenneth Welsh has been the subject of ten other disclosures:

• December 2023—“ Claimant alleges that beginning around September 2012, the financial advisor made unsuitable investments, specifically in unit investment trust (UIT) and exchange-traded funds (ETF), to maximize his compensation.” The customer dispute is still pending.
• July 2022—“ CLIENT ALLEGES THAT FUNDS WERE MISAPPROPRIATED FROM HIS ACCOUNT ON TWO OCCASSIONS IN 2012.” The customer dispute was closed-no action.
• February 2022—” Arbitration: Claimant alleges that Financial Advisor recommended eight Equity-Indexed Annuity Contracts that she alleges were not suitable for her. Complaint: Client’s attorney complains that monies were withdrawn from her brokerage account without her authorization in 76 transactions over a 27 month period. (12/1/2018-3/1/2021).” The customer dispute settled for $5,850,000.00.
• November 2021—“ Customers verbally complained that the financial advisor recommended inappropriate investments, and also expressed concerns related to annual fees, and potential fraud. (5/13/2013-11/10/2021).” The customer dispute settled for $30,531.61.
• November 2021—“ Client complained that the financial advisor opened a margin account without permission and also wrote checks from his account without permission. (9/11/2012-6/18/2021).” The damage amount requested was $405,560.00 and the customer dispute settled for $357,525.00.
• October 2021—Pending Criminal Charge for Wire Fraud.
• August 2021—“ Client verbally complained that financial advisor assured him that he would see a purchase of stock on his next statement. However, order was GTC and had not filled by the time next statement was issued. (3/24/2020-8/4/2021).” The customer dispute settled for $21,355.27.
• June 2021—“ Attorney for complainant claimed that funds were stolen by the financial advisor. (1/28/2016-1/21/2021).” The damage amount requested was $225,000.00 and the customer dispute settled for $346,040.02.
• June 2021— Discharged by Wells Fargo Clearing Services, LLC, “Allegations were made that Mr. Welsh may have misappropriated funds from Wells Fargo Clearing Services, LLC clients.”
• April 2021—“ Attorney for customer wrote that the Financial Advisor is the likely perpetrator of a theft fraud on the client related to the alteration of checks, and payments and transfers from the client’s accounts. (9/11/2014).” The customer dispute settled for $592,920.32.

For a copy of Kenneth Welsh’s SEC Advisor Info, click here.

We Help Investors Recover Investment Losses

FINRA Rule 2150 specifically addresses theft and conversion in a customer account, stating “no member or person associated with a member shall make improper use of a customer’s securities or funds.” This rule includes any “guarantee” that brokers make to customers in relation to losses incurred in a brokerage account.

In addition, FINRA Rule 3240 strictly prohibits a financial advisor from borrowing money from a client absent from unique circumstances, such as a familial relationship between the Financial Advisor and the client. There is also an exception if the client is a financial institution regularly engaged in the business of lending. The reason for this prohibition is clear—borrowing money from clients creates an immediate conflict of interest and can potentially lead to theft or conversion of client assets.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.