From 2011 through 2018, E. Herbert Hafen allegedly promised clients 6% annual returns on an investment outside the brokerages where he worked, the SEC says in a litigation release.
He then allegedly convinced the clients to withdraw money from accounts held with the brokerages where he was registered, sometimes liquidating their equity holdings and retirement accounts, and then deposit it in their own personal bank accounts, according to the SEC’s complaint.
Hafen then allegedly told the clients to transfer or wire the money to his own personal bank account, from which he spent the money on personal expenses, including a house and car, and credit card payments for himself and his family, the regulator says.
He left that wirehouse just two months after he started, however, and worked at four other firms before joining Morgan Stanley in 2008, according to his record. He left for Wells Fargo in March 2018 and was discharged from the firm in August the same year after allegedly admitting "to entering into financial arrangements with clients that were not approved by the firm,” according to BrokerCheck.
Finra barred Hafen last October over his alleged failure to provide requested information for the investigation into his termination from Wells Fargo, the industry’s self-regulator says.
In addition to the SEC charges, Hafen faces criminal charges filed by the U.S. Attorney’s Office for the Southern District of New York in a parallel action, according to the SEC.