SEC Charges Financial Advisor with Fraud for Stealing from Elderly Customers to Pay Personal Expenses

The Securities and Exchange Commission (SEC) has taken legal action against Douglas McKelvey, a former financial advisor, for engaging in fraudulent activities by misappropriating over $1.7 million from two elderly brokerage customers, who happened to be close relatives of McKelvey.

According to the SEC’s complaint, McKelvey committed the fraud between June 2013 and February 2022 while working as a registered representative and investment adviser representative at a prominent financial institution’s Southlake, Texas office. During this period, McKelvey allegedly initiated more than 300 unauthorized disbursements of funds from the customers’ accounts, diverting the money to pay his and his wife’s personal expenses, including credit card bills. In addition, he purportedly sold securities from the customers’ accounts to generate some of the funds, while also attempting to conceal his illicit activities.

The SEC has filed the complaint in the U.S. District Court for the Northern District of Texas, charging McKelvey with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC seeks permanent injunctive relief, disgorgement of the ill-gotten gains along with prejudgment interest, and a civil penalty.

Concurrently, the U.S. Attorney’s Office for the Eastern District of Texas has announced criminal charges against McKelvey, and he has pled guilty to those charges.

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The SEC’s investigation into this matter, led by Emmy Rush, James Flynn, and Wendy Tepperman and supervised by Tejal D. Shah of the New York Regional Office, remains ongoing. Litigation will be spearheaded by Ms. Rush and Ms. Tepperman, with support from Matthew J. Gulde and Rebecca Fairchild of the Fort Worth Regional Office. The SEC acknowledges the collaboration of the U.S. Attorney’s Office for the Eastern District of Texas, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority in this case.