Access to Client Brokerage Accounts Allows Adviser to Misappropriate Client Funds

September 1, 2014

The SEC brought an administrative action against Brian K. Velten, who from 2009 through 2012, was an unregistered investment adviser who resided in Tampa and Miami, Florida during this time. Velten would receive money from clients, open accounts in their names at Fidelity Brokerage Services, LLC (Fidelity), trade securities on their behalf, and retain a portion of the funds for himself. With respect to some clients, the amount Velten retained was an agreed upon fee. With respect to other clients, Velten converted the funds for his own use. Velten promised his clients—who he knew because they or their relatives had invested in annuities through Velten—large profits if they would invest their annuity funds in the stock market. For those clients who agreed to invest, Velten would open an account at Fidelity, and the clients would transfer funds from their annuities into the account, to which Velten had access through Fidelity’s website. Velten then converted to his own use a substantial portion of three of these clients’ funds.
Click here for the administrative action.


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Investment Advisers