The Securities and Exchange Commission has barred Elias Herbert Hafen, a former financial adviser at Wells Fargo and Morgan Stanley sentenced to 30 months in prison after convincing retail clients to liquidate their stock holdings and personal retirement accounts to invest in a fake investment scheme. Hafen purportedly stole approximately $1.6 million from his clients.
From 2011 through 2018, while employed at Wells Fargo and Morgan Stanley, Hafen told his clients that he had access to an investment opportunity not offered by the firms that would pay an annual 6 percent return.
According to the original complaint, Hafen instructed his clients to withdraw their money from the financial institution and deposit it into their personal bank accounts, and then transfer or wire the money to his personal bank account.
Once Hafen received his clients’ money, he did not invest it as promised, but instead used it on personal expenses, including house and car payments and to pay credit card bills for himself and family members.
Hafen pled guilty to one count of investment adviser fraud. In addition to the prison term, he was sentenced to three years of supervised release, ordered to pay $745,000 in restitution, and ordered to forfeit $806,750.
Hafen, who was barred by FINRA in late 2018, was fired by Wells Fargo after less than one year with the firm for engaging in unapproved financial arrangements with his clients. He spent nine years with Morgan Stanley and 17 years with Bear Stearns, according to his Brokercheck profile.