SEC Charges Former Broker Kenneth Welsh After Misappropriation Of Nearly $3M

Kenneth Welsh (Kenneth Andrews Welsh CRD:# 4657872) is a former registered broker and investment advisor whose last known employer was Wells Fargo Clearing Services, LLC (CRD#:19616) of Fairfield, New Jersey. Previously, he was employed with three divisions of Smith Barney (CRD#: 149777, 8209, and 7556), also of Fairfield. He has been in the industry since 2004.

On October 28, 2021, The Securities & Exchange Commission (SEC) charged Welsh with misappropriation of $2.86 million from client accounts. Many of these clients were elderly investors, described by the SEC as “financially unsophisticated.”

Prior to any transfer, the complaint alleges, Welsh circumvented the firm’s policies to carry them out. He also sold and traded in the customer accounts to ensure available cash for his unauthorized activity. Welsh made these sales within days of the illicit transfers.

From January 2016 to January 2021, the complaint alleges that Welsh simply transferred funds from his client’s accounts into credit card accounts in both his wife’s name and that of his parents using Automated Clearing House (ACH) transfers. He was also responsible for fraudulent checks drawn on customer accounts. All told, Welsh was responsible for at least 137 fraudulent transactions, with some of the funds transferred to himself. The misappropriated funds were also used to purchase luxury goods, gold coins, other precious metals.

Silver Law Group represents victims of stockbroker misconduct and we have seen a rise in cases involving improper borrowing or taking money by stockbrokers from customers.  This case exemplifies the problem and shows a growing trending in broker theft cases.  Elder financial fraud takes many forms and financial advisors have unique insight into their clients financial and personal lives.  Over the last several years, our team of securities fraud attorneys have represented customers against financial advisors who have convinced clients to give them money for a variety of issues including personal expenses, real estate projects, business loans and, in many cases, ponzi schemes being orchestrated by advisors or where advisors are being paid a commission for the sale of the scheme.

Stockbrokers Cannot Borrow Money From Customers

In just a six-month period, Welsh acquired six disclosures in his FINRA record, one of which is the SEC complaint.

On 6/17/2021, Wells Fargo discharged Welsh after the allegations of misappropriation surfaced.

On 8/4/2021, a customer filed a dispute claiming that Welsh 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.”  The claim was settled for $21,355.27.

The three previous customer disputes are currently listed as pending:

• Dispute filed on 4/27/2021 alleges that “Attorney for customer writes 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.” No request for damages is listed.
• Dispute filed on 6/11/2021 alleges that “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 client requests damages of
  $1,857,001.59
• Dispute filed on 6/29/2021 alleges that “Attorney for complainant claims that funds were stolen by the financial advisor. (1/28/2016-1/21/2021)” The client requests damages of $225,000.

No additional information is available on these disputes.

Did You Invest With Kenneth Welsh?

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.