Ex-Morgan Stanley Broker Pleads Guilty to Investment Adviser Fraud

A Former Morgan Stanley (MS) broker who was barred by the Financial Industry Regulatory Authority (FINRA) last year has pleaded guilty to defrauding his clients of hundreds of thousands of dollars. Elias Herbert Hafen was a registered Morgan Stanley rep. from 2009 until 2018 and then briefly went to work for Wells Fargo Clearing Services. According to his BrokerCheck record, Wells Fargo (WFC) fired him after just several months because he had financial agreements with clients that the firm never approved.

A news release of Hafen’s guilty plea on Justice.gov states that between 2013 and 2018, Hafen defrauded at least 11 financial advisory clients by fooling them into thinking he was able to access a high yield investment fund that came with guaranteed investment returns. This fund, however, was not affiliated with the investment bank where Hafen was a registered broker. In fact, it did not exist.

Because of Hafen’s investment advice, a number of his clients moved hundreds of thousands of dollars to his own bank account, from where he was supposed to invest in the fund. Instead, he generated fake bank statements using the name of an investment company that didn’t exist and, rather than use investors’ funds as intended, Hafen spent their money to fund his luxury lifestyle.

He pleaded guilty to investment adviser fraud and is now facing up to five years in prison.

Meantime, the US Securities and Exchange Commission (SEC) has filed a parallel civil complaint against Hafen. The regulator alleges that he committed investor fraud from 2011 to 2018 and targeted retail investors, who were promised 6% yearly returns on a low risk investment outside of his firm. As a result, Hafen’s clients at the firm where he worked liquidated their personal retirement accounts and stock holdings and sent the money to him.

The Commission is accusing Hafen of defrauding his victims of $1.6M, only $650K of which he has given back.

Hafen worked 39 years in the industry. He has also been a registered rep. with Bear Stearns & Co., Bateman Eichler, Hill Richards, Inc., Consolidated Capital Securities, Sutro & Co., and Merrill Lynch, Pierce, Fenner, & Smith.

Investor Fraud Claims
If Elias Hafen was your Morgan Stanley broker or Wells Fargo rep. and you suspect that you were defrauded, please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today so that we can help you explore your legal options.