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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22821 / September 27, 2013

Securities and Exchange Commission v. Brian K. Velten, Civil Action No. 1:13-cv-23477 (S.D. Fla.)

The Securities Exchange Commission ("SEC") filed a civil injunctive action on September 26, 2013 in the United States District Court for the Southern District of Florida against Brian K. Velten alleging violations of the antifraud provisions of the federal securities laws in connection with his scheme to defraud at least three senior citizens who held accounts at Fidelity Brokerage Services, LLC ("Fidelity"), a broker-dealer registered with the SEC.

The SEC's complaint alleges that, from no later than July 2009 through at least September 2012, Velten, an unregistered investment adviser, opened accounts for his clients at Fidelity and engaged in a scheme to defraud at least three of them by misappropriating approximately $171,000 from the clients' accounts, making false claims about his ability to generate large profits trading stocks for the clients, and trading stocks on margin without client authorization.

The SEC further alleges that Velten opened accounts online for the clients and obtained the username and PIN information for the accounts, enabling him to access the accounts through Fidelity's website. Velten filled out margin applications online and traded on margin in at least two client accounts without authorization. Trading on margin caused the clients to borrow money from Fidelity to purchase additional securities. In several instances, Velten negotiated checks drawn against client accounts and kept the funds for his own use.

As alleged in the SEC's complaint, Velten violated Section 17(a) of the Securities Act of 1993, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC's complaint seeks a permanent injunction prohibiting future violations of the securities laws, disgorgement of all ill-gotten gains, and a civil money penalty against Velten.

The SEC's investigation was conducted in the Miami Regional Office by Laura R. Smith, Senior Counsel, and Fernando Torres, Senior Regional Accountant, under the supervision of Jason R. Berkowitz, Assistant Regional Director. Andrew Schiff, Senior Trial Counsel, will lead the SEC's litigation.

 

http://www.sec.gov/litigation/litreleases/2013/lr22821.htm


Modified: 09/27/2013