Former Morgan Stanley broker Douglas McKelvey (CRD# 4502849) is accused of defrauding his own mother and another relative, according to Barrons. He was registered with Morgan Stanley in Southlake, Texas, from 2009 to 2022, when he was terminated regarding, “Allegations regarding representative’s unauthorized activity and misappropriation of funds from client accounts, which were held by relatives of the representative.”
In August 2022, FINRA barred him after he “consented to the sanction and to the entry of findings that he refused to provide information and documents requested by FINRA. The findings stated that this matter originated from a Uniform Termination Notice for Securities Industry Registration (Form U5) filed by McKelvey’s member firm stating that he had been discharged because of concerns regarding his unauthorized activity and misappropriation of client funds from client accounts, which were held by his relatives.”
In June 2023, he pleaded guilty to fraud charges, according to the Securities and Exchange Commission (SEC). According to the SEC, from approximately June 2013 through February 2022, he engaged in a fraudulent scheme through which he misappropriated more than $1.7 million from accounts of two elderly relatives, including his mother, while he served as their financial advisor at a Morgan Stanley. The SEC reported that he carried out his scheme by initiating fraudulent disbursements of funds from the customers’ accounts to make credit card payments on cards used by him and/or his wife to pay their personal expenses. He also allegedly used unauthorized checks to be issued from the customer’s accounts to make credit card payments, and he allegedly initiated unauthorized ACH transactions through the credit card companies that withdrew the funds from the customers’ accounts. It is alleged that he made false attestations on internal forms that he had received a verbal request from the customer to issue the check from Morgan Stanley.
According to the SEC, as part of the scheme, he frequently sold securities in the customer account in order to generate cash so he could misappropriate the proceeds of those sales. The SEC also found that each of the unauthorized withdrawals from the customer was a loan advance taken against the securities holdings in the account and therefore constituted a sale of the securities. The SEC complaint also alleged that he took steps to conceal his fraud by falsely telling the customer that it was normal practice for Morgan Stanley to route customer funds through another financial institution and that nothing was amiss.
In January 2024, the SEC barred the broker related to “a fraudulent scheme through which he misappropriated more than $1.7 million from accounts of two elderly relatives who were brokerage customers while he served as their financial advisor at Financial Institution A. The complaint further alleged that McKelvey sold securities from the customers’ accounts to generate some of the funds he misappropriated and took steps attempting to conceal his misconduct.” He pled guilty to one count of money laundering. The complaint alleges that he misappropriated investor funds held in brokerage accounts and redirected them for personal, nonbusiness use.
Doug McKelvey Customer Complaints
He has been the subject of three customer complaints between 2008 and 2023, according to his CRD report. The most recent complaints were regarding:
February 2023. “Claimant alleges, inter alia, that the FA misappropriated funds from client’s accounts 2008 – 2022.” The case was settled for $450,000.
May 2022. “Claimant alleges, inter alia, FA misappropriated funds from Claimants’ accounts – 2016 to 2022.” The case was settled for $1,400,000. The complaint was regarding managed and wrap accounts.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Morgan Stanley may be liable for investment or other losses suffered by Doug McKelvey’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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