A one-time independent contractor broker who had not worked in the securities industry for almost 20 years was sentenced to two years in prison for defrauding investors out of hundreds of thousands of dollars, according to court filings and a report by Bloomberg News.
Kenneth Thom, 42, reinvented himself as a finfluencer known as “K Money” and received his sentence Tuesday in federal court in Manhattan, months after he pleaded guilty to investment advisor fraud.
According to his BrokerCheck work profile, Thom was last registered in the securities industry in 2008 with Next Financial Group Inc., which was one of the firms LPL Financial Holdings Inc. acquired two years ago when it bought the Atria Wealth Solutions network of firms.
FINRA suspended Thom from the retail securities industry in 2011 for failing to comply with a variety of FINRA compliance standards and requests, including failure to pay an arbitration award, according to BrokerCheck.
“The rise of social media influencers who dispense investment advice to their followers has raised concerns among regulators,” according to the Bloomberg report. “Though a number of finfluencers partner with Wall Street firms, others peddle their own financial products. The trend has resulted in a number of arrests.”
So-called finfluencer behavior that puts investors and financial advisors at risk is more common.
FINRA in 2024 slapped online brokerage firm M1 Finance with an $850,000 fine for violations related to its social media influencer program.
In its first formal enforcement action against a firm over its supervision of finfluencers, FINRA issued the fine following its targeted examination of firms’ use of social media to attract new customers.
According to a parallel complaint filed last year by the Securities and Exchange Commission, Thom, who used the monikers “K Money” and “K$” online, portrayed himself as a trading “luminary,” and a “former Wall Street market maker” who had enjoyed an “illustrious career.”
According to the SEC’s complaint, Thom solicited investors via a Facebook group that he ran, inviting them to send him funds that he represented would be pooled in one or more shared accounts and traded on their behalf.
The complaint alleged that based on Thom’s representations, investors understood that any profits would be shared, with Thom taking 50% of the profit and the investors sharing the other 50% on a pro rata basis.
Thom of Westfield N.J. raised over $600,000 from more than fifty investors, and misappropriated approximately $235,000 of it, including by spending investor funds on luxury goods and a vacation rental, according to the complaint.
In addition to making material misrepresentations about the use of investor funds while soliciting such funds, Thom lied about his trading performance in the so-called Shared Account, the SEC claimed.
Hendershott Wealth Management's Hilary Hendershott on turning a niche for women into an operating strategy, not a marketing pitch.
Iowa's Greenwood Wealth Partners exits D.M. Kelly as UBS and Ameriprise win Merrill Lynch recruits in California and Florida
Less than 1% of pool funds went to actual trading, CFTC says
Plus, SEIA builds a governed data foundation for its in-house AI and Snappy Kraken debuts a read-only marketing coworker for advisors.
He owes $364 million but pays $100 a month
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
