Kenneth Andrews Welsh, of Fairfield, New Jersey, a stockbroker formerly registered with Wells Fargo Clearing Services, LLC, has been charged by Securities and Exchange Commission (SEC) with fraudulently misappropriating funds while he was associated with Wells Fargo Clearing Services. Civil Action No. 2:21-cv-19387 (Oct. 28, 2021).
According to the Complaint, more than $2,860,000.00 had been misappropriated by Welsh when he was responsible for handling accounts of brokerage and advisory customers. The regulator states that some of Welsh’s customers were financially unsophisticated and elderly.
SEC alleges that between January of 2016 and January of 2021, 100 automated clearing house (ACH) transactions had been effected by Welsh to move funds from customers’ accounts to credit cards in Welsh’s spouse’s and parents’ names. Welsh purportedly used investors’ funds for his personal benefit. The complaint also alleges that Welsh had checks drawn on customers’ accounts to buy precious metals and gold coins and to pay expenses. These transactions lacked customers’ authorization.
According to the Complaint, Wells Fargo’s procedures and policies were circumvented by Welsh so that the transfers could be carried out. Welsh purportedly altered checks to accomplish these transactions. SEC alleges that to generate cash to steal, securities were frequently sold by Welsh in customers’ accounts before fraudulent transfers were executed.
According to the Complaint, Welsh violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a)(1) and 17(a)(2), and Investment Advisers Act of 1940 Section 206(1) and (2).
Financial Industry Regulatory Authority (FINRA) Public Disclosure shows that Welsh has been identified in five customer initiated investment related disputes regarding allegations of his misconduct while employed by securities broker dealers, including Wells Fargo Clearing Services. On April 27, 2021, a customer filed an investment related complaint involving Welsh’s activities. The customer requested compensatory damages founded on accusations of the customer being defrauded by Welsh during the time that Welsh was employed by Wells Fargo Advisors. The claim alleges that the customer’s checks were altered and that funds were removed from their accounts, resulting in damages.
Welsh is also the subject of a customer initiated investment related written complaint on June 11, 2021. The customer sought $1,857,001.59 in damages based upon allegations of Welsh taking funds from their account without authorization between December 1, 2018, and March 1, 2021. The complaint alleges that over a two-year period, 76 unauthorized transactions were effected from the customer’s Wells Fargo account.
On June 29, 2021, another customer initiated investment related complaint concerning Welsh’s conduct was resolved for $346,040.02 in damages supported by accusations that Welsh stole the customer’s funds from January 28, 2016, to January 21, 2021, when Welsh was the customer’s financial advisor representative at Wells Fargo Advisors.
Welsh is also identified in a customer initiated investment related written complaint which was settled for $21,355.27 in damages on September 16, 2021, founded on allegations of inaccurate statements by Welsh regarding the customer’s equity portfolio at Wells Fargo Advisors.
Welsh is the subject of a different customer initiated investment related written complaint on November 2, 2021, in which the customer requested $405,560.00 in damages based upon accusations of Welsh’s unauthorized creation of a customer’s margin account and writing of checks from the customer’s account in 2021 while registered with Wells Fargo Advisors.
Welsh was registered with Wells Fargo Clearing Services between September 7, 2012, and July 8, 2021. He was discharged by Wells Fargo Clearing Services supported by allegations of his possible misappropriation of funds.
