Financial advisor Kenneth Welsh is facing criminal wire fraud charges and defending against claims by the SEC that he stole $2.86 million of customer funds while employed by Wells Fargo Advisors. The SEC alleges that, between at least January 2016 and January 2021, Welsh used more than a hundred fraudulent Automated Clearing House 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. In addition, Welsh reportedly 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 the transactions at issue were knowingly authorized by Welsh’s clients or customers, some of whom were elderly and financially unsophisticated.
Welsh is also the subject of a host of customer complaints involving allegations that he recommended unsuitable investments. Many of the cases have settled, while some are still pending.
Misrepresentations and Omissions
There are a multitude of state and federal statutes that make it unlawful to mislead and defraud investors in connection with the purchase or sale of securities. The best known of these laws is Section 10(b) of the Securities Exchange Act of 1934, which is a federal statute. Each of the 50 States has its own set of securities laws, known as “blue sky” laws. Many States have modeled their blue sky laws on the Uniform Securities Act, which contains a variety of different civil liability provisions relating to misrepresentations and omissions.
Suitability / Regulation Best Interest
Financial advisors have a duty to recommend suitable investments and investment strategies to their clients and otherwise act in their clients’ best interests. A recommendation is only suitable if it comports with the client’s investment objectives, risk tolerance, investment experience, investment time horizon, liquidity needs, and income needs. Together these considerations form the investor’s unique “investment profile.” The duty to recommend suitable investments cannot be disclaimed through risk disclosures or waivers.
If you have suffered investment losses as a result of the malpractice or misconduct of Kenneth Welsh, our experienced team of securities attorneys may be able to assist you in recovering some or all of your losses. Call us toll-free at 888-607-4819 for a free consultation or email us through our “Contact” page to schedule a free consultation.