Articles Posted in broker theft

The Financial Industry Regulatory Authority (FINRA) recently barred a financial advisor from Alexandria, Virginia who had been registered with Wells Fargo Clearing Services LLC.  According to the FINRA AWC (Letter of Acceptance, Waiver, and Consent), FINRA began an investigation into whether Paul Trimber “converted a senior customer’s funds for his personal use and benefit…”  Mr. Trimber allegedly refused to produce documents in response to FINRA’s requests in the investigation, resulting in FINRA’s bar from Mr. Trimber associating with any FINRA member.

According to FINRA’s Brokercheck report, Mr. Trimber was terminated by Wells Fargo in February 2024 for the following reason:  “Financial Advisor discharged after he admitted during review to making unauthorized transfers of client funds to recipients outside of the Firm.”

Financial Advisors occupy positions of trust and access to accounts that unfortunately can result in the theft of customer funds.  In such situations, the brokerage firms for which the advisor is registered also bear responsibility for their advisors’ criminal actions, and also can be found liable for failures to supervise the wrongful activity.

A former stockbroker / investment advisor from Bergen County, New Jersey, has been indicted for allegedly stealing over $3 million from five unsuspecting clients. Kenneth A. Welsh, 42, of River Edge, has been charged with four counts of wire fraud and one count of investment advisor fraud, as announced by U.S. Attorney Philip R. Sellinger on November 16, 2023.

According to the indictment, from July 2017 through March 2021, Welsh, operating as a financial advisor registered with Wells Fargo Clearing Services, purportedly abused his position to misappropriate funds entrusted to him by clients. Instead of responsibly managing their investments, Welsh is accused of diverting substantial sums into accounts under his control, leaving his clients in financial distress. The charges carry severe penalties, with each wire fraud count potentially leading to 20 years in prison and a $250,000 fine, while the investment advisor fraud count could result in five years behind bars and a $10,000 fine, or twice the gross gain or loss from the offense.

The indictment details that Mr. Welsh allegedly used multiple fraudulent means to siphon off customer funds, including having customers sign forms in blank, fraudulently forging signatures, and carrying out unauthorized wires from customer accounts.

Lickhai Quach, a Silver Spring, Maryland broker/agent of Transamerica Financial Advisors, Inc., was recently barred by FINRA from association with any FINRA firm.  The FINRA Letter of Acceptance, Waiver, and Consent states that Mr. Quach refused to produce documents or information to investigators as required by FINRA Rule 8210.

Mr. Quach was allegedly under investigation by FINRA as a result of being permitted to resign “while under review by the firm for violating firm’s policy related to borrowing funds from a client.”  Mr. Quach’s FINRA Brokercheck report states that he was registered with Transamerica since 2012.  The report further states that he had one recent customer complaint relating to borrowed funds that settled, and that he was permitted to resign in March, 2023.

Registered financial advisors are generally prohibited from borrowing money from customers under FINRA Rule 3240 except in limited circumstances such as from a family member or other personal relationship.  The loan must also be disclosed and approved by the advisor’s firm.

Miche Jean was a registered securities salesperson with Morgan Stanley in Rockville, Maryland since 2015. However, on November 12, 2020, Morgan Stanley submitted a Termination Notice (Form U5), indicating that they terminated Jean’s employment due to concerns related to his trading strategy for certain clients, potential unauthorized discretion in specific accounts, and incomplete and delayed communication with clients regarding transactions. Furthermore, on March 30, 2021, an amended Form U5 disclosed a customer complaint alleging unauthorized trading with exchange-traded funds (ETFs) during Jean’s tenure at Morgan Stanley.

Then, on November 15, 2022, the Maryland Securities Commissioner issued a Consent Order in which Jean admitted to fraudulent actions during his time with Morgan Stanley in Maryland. Specifically, he was found to have initiated four ACH transfers, totaling $10,182, from a Morgan Stanley customer’s brokerage account to cover his personal credit card expenses.

FINRA, a national self-regulatory securities regulator, recently barred Mr. Miche from the industry pursuant to a decision by its Office of Hearing Officers.

On July 25, 2023, the Financial Industry Regulatory Authority (FINRA) issued a Letter of Acceptance, Waiver, and Consent (AWC) against LPL Financial LLC, a prominent independent securities broker headquartered in Fort Mill, South Carolina. This disciplinary action followed a series of egregious violations that involved the conversion/theft of approximately $2.4 million of customer funds by two of the firm’s brokers.

Background

The AWC against LPL Financial LLC was the result of a failure to reasonably supervise the transmittal of customer funds, which enabled two firm registered representatives to convert substantial sums of money for their personal use. The findings by FINRA in the AWC are outlined below:

Former RBC and Ameriprise securities broker Scott Jay Matalon of Jericho, New York was recently barred from the industry by FINRA, a securities regulator.  The Letter of Acceptance, Waiver, and Consent states that Mr. Matalon failed to produce documents or information in response to an investigation regarding an arbitration Statement of Claim which was filed.

Mr. Matalon’s FINRA Brokercheck report lists a criminal charge, as well as a customer complaint seeking $2,500,000 in damages.  The Brokercheck description of the customer complaint references allegations of conversion of funds from the now deceased customer.

Firms that employ securities salespersons can be held liable for the conversion (theft) of customer funds even if the firm claims that its supervisors were not aware of the theft.  Please read here about broker theft and failure to supervise.  If you were a victim of a financial advisor who stole funds from your accounts or investments, please contact our securities fraud lawyers for a free consultation about your case.

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