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Investment Fraud Allegations: What Investors Should Know
Todd Charles Welsh (CRD# 3214419), a registered broker and investment adviser based in Tulsa, Oklahoma, is currently involved in a pending customer dispute related to alternative investments. According to his FINRA BrokerCheck report, Welsh is facing allegations related to due diligence failures on a fund of funds investment that was allegedly unsuitable for investors. This investigation raises serious questions about disclosure practices and suitability determinations that investors should understand.
The pending FINRA arbitration (Docket# 24-01773) filed on August 27, 2024, contains serious allegations that demand attention from current and potential clients. The complaint spans activities from December 2010 to 2023 and centers on claims that UBS Financial Services, where Welsh previously worked, failed to conduct adequate due diligence on a fund of funds product. The claimant’s counsel alleges this investment vehicle was fundamentally unsuitable for any investor and that relevant risks were not properly disclosed to those who purchased it.
It’s worth noting that Welsh has stated he is not specifically named in the arbitration. According to his statement in the BrokerCheck report, the clients who initiated the proceeding remain his clients and “have indicated that they had no intention of filing against him as part of this matter” and “do not hold him responsible.” Nevertheless, the allegations raise important concerns about the alternative investment products offered through firms where Welsh has been employed.
Current Employment and Registration Status
Todd Charles Welsh currently maintains dual professional registrations in the financial services industry. Since January 15, 2023, he has served as an Investment Adviser Representative with Scissortail Wealth Management, LLC (CRD# 297761) in Tulsa, Oklahoma. He has also been registered as a broker with Level Four Financial, LLC (CRD# 25700) since November 10, 2018.
As a General Securities Representative, Welsh holds licenses in seven states: Alabama, California, Delaware, Georgia, Kansas, Oklahoma, and Texas. His office is located at 1203 East 33rd Street, Suite 100, in Tulsa, Oklahoma, where both firms maintain branch offices.
Prior to these positions, Welsh worked at UBS Financial Services Inc. from January 2009 to November 2018, the firm where the alleged unsuitable investment recommendations occurred. Before UBS, he was affiliated with Merrill Lynch, Pierce, Fenner & Smith Incorporated from 1999 to 2009, giving him over two decades of experience in the securities industry.
Professional Background and Qualifications
Todd Welsh entered the securities industry in 1999 and has acquired several professional credentials during his career. He holds the Certified Financial Planner designation, which requires rigorous education, examination, experience, and ethical standards. His industry examination history demonstrates a broad range of competencies, having passed:
- Securities Industry Essentials Examination (SIE) in October 2018
- National Commodity Futures Examination (Series 3) in May 2011
- Futures Managed Funds Examination (Series 31) in March 2004
- General Securities Representative Examination (Series 7) in June 1999
- Uniform Combined State Law Examination (Series 66) in June 1999
This examination history reflects Welsh’s qualifications to provide advice on a wide range of investment products, including complex vehicles like futures and alternative investments. His passage of both the Series 7 and Series 66 exams enables him to act as both a registered representative (broker) and an investment adviser representative, roles that carry different legal standards and responsibilities toward clients.
The Nature of Alternative Investments
The investment products at the center of the customer dispute—specifically a “fund of funds” structure—belong to the broader category of alternative investments, which differ significantly from traditional stocks, bonds, and mutual funds. Understanding these products is essential for investors considering working with advisers who recommend them.
Alternative investments typically offer potential benefits such as diversification, reduced correlation with traditional markets, and access to specialized investment strategies. However, they also present distinct challenges and risks that make them unsuitable for many retail investors.
A fund of funds, the specific investment type mentioned in the complaint against UBS, is a pooled investment vehicle that invests in multiple underlying funds rather than directly in securities. This structure adds layers of complexity, cost, and potential opacity. Investors in such products often face:
- Multiple layers of fees (both at the fund of funds level and within each underlying fund)
- Limited transparency into underlying investments
- Restricted liquidity and extended lock-up periods
- Complex tax reporting requirements
- Heightened dependency on manager selection and due diligence
The allegations against UBS specifically target the due diligence process on such a product, highlighting how critical proper evaluation is for these complex instruments. For investors, the case underscores the importance of working with financial professionals who thoroughly understand these products and who implement rigorous processes to evaluate their appropriateness for each client’s specific situation.
Understanding Due Diligence and Suitability Concerns
The core allegations in the complaint against UBS focus on two critical aspects of investment advice: due diligence and suitability. These concepts represent fundamental obligations that investment professionals owe to their clients.
Due diligence refers to the investigation and analysis a financial professional should perform before recommending an investment. For complex products like alternative investments, this process should be especially thorough and typically includes:
- Evaluating the investment strategy and its underlying assumptions
- Assessing the qualifications and track record of the investment managers
- Analyzing the fee structure and its impact on potential returns
- Reviewing the legal and operational structure of the investment
- Examining potential conflicts of interest
- Stress-testing the investment under various market scenarios
- Verifying the accuracy of marketing materials and disclosures
The complaint alleges that UBS failed to conduct adequate due diligence on the fund of funds product, suggesting that a proper investigation would have revealed concerns about its suitability for investors.
Suitability, meanwhile, refers to the obligation of financial professionals to recommend only those investments that align with a client’s financial situation, investment objectives, risk tolerance, and other personal circumstances. Under FINRA Rule 2111, brokers must have a reasonable basis to believe that a recommendation is suitable for at least some investors (reasonable-basis suitability), is appropriate for a specific customer given their investment profile (customer-specific suitability), and does not involve excessive trading when the broker has actual or de facto control over an account (quantitative suitability).
The claim that the fund of funds was “unsuitable for any investor” suggests the allegation involves reasonable-basis suitability—that the investment was fundamentally flawed and should not have been recommended to anyone, regardless of their investment profile.
Disclosure Requirements and Investor Protection
Financial advisers and brokerage firms have legal and regulatory obligations to disclose material facts about investments they recommend. These disclosure requirements are particularly important for complex products like alternative investments, where the risks and features may not be readily apparent to typical investors.
Proper disclosures should include, at minimum:
- The nature and structure of the investment
- All fees, expenses, and compensation arrangements
- Potential conflicts of interest
- Specific risk factors associated with the investment
- Liquidity restrictions and redemption limitations
- Historical performance (with appropriate disclaimers)
- The basis for any projections or forward-looking statements
The allegation that “relevant risks were not disclosed to investors” suggests that UBS may have failed to fulfill these disclosure obligations regarding the fund of funds product. If proven, such a failure would represent a serious breach of investor trust and potentially violate securities regulations.
For investors working with Todd Charles Welsh or other financial professionals, this case highlights the importance of receiving clear, comprehensive written disclosures about any recommended investments, particularly those involving alternative strategies. Investors should never hesitate to ask questions about aspects of an investment they don’t fully understand and should be wary of advisers who are unable or unwilling to provide satisfactory explanations.
Red Flags for Investors to Watch
Whether working with Todd Charles Welsh or any financial professional, investors should remain vigilant for warning signs that might indicate potential problems with investment recommendations. The FINRA arbitration allegations against UBS highlight several common red flags that apply particularly to alternative investments.
When evaluating investment opportunities or reviewing existing holdings, investors should be concerned by:
Inadequate explanation of investment strategies. Financial advisers should be able to clearly articulate how an investment works, what drives its returns, and what specific risks it entails. Vague descriptions or excessive jargon may indicate the adviser doesn’t fully understand the product or is attempting to obscure its risks.
Promises of returns that seem too good to be true. Alternative investments that offer unusually high returns with supposedly minimal risk often involve hidden dangers or misrepresentations. Remember that higher potential returns almost invariably come with higher risks.
Pressure to invest quickly. Legitimate investment opportunities rarely require immediate decisions. High-pressure sales tactics suggesting limited availability or closing windows are frequently used to prevent proper due diligence.
Lack of transparency about fees. Alternative investments often involve multiple layers of fees that can significantly impact net returns. All costs should be clearly disclosed and explained, including management fees, performance fees, transaction costs, and expenses at both the fund of funds level and within underlying funds.
Limited or restricted access to investment information. If the adviser is unable or unwilling to provide offering documents, prospectuses, or other official materials describing the investment, this may indicate problems with transparency or compliance.
Excessive complexity relative to the client’s sophistication. While some complexity is inherent in alternative investments, the adviser should be able to explain the product in terms the investor can understand. If the explanation remains confusing after reasonable effort, the investment may be unsuitable.
Misalignment with stated investment objectives. Recommendations that clearly conflict with an investor’s documented goals, time horizon, or risk tolerance warrant immediate questions and potentially a second opinion from another financial professional.
Additional Business Activities and Potential Conflicts
Todd Charles Welsh’s BrokerCheck report reveals extensive involvement in multiple outside business activities related to investments. While these activities don’t necessarily indicate any impropriety, they do highlight potential areas where conflicts of interest might arise. Investors working with Welsh should be aware of these business relationships and understand how they might influence the investment advice they receive.
Welsh’s outside business activities include managing partner or ownership stakes in numerous limited liability companies with varied investment focuses:
- Milton Global Enterprises, LLC manages commercial real estate investments. Welsh serves as managing member, having started this venture in September 2006.
- Red Wolf Holdings, LLC holds private investments in HealthPro Heritage LLC and a cryptocurrency mining operation. Welsh is a partner in this entity, which began in May 2013.
- Vasayok, LLC involves private investments in Vasayo, with Welsh serving as managing partner since November 2016.
- Scissortail Holdings, LLC manages real estate investments, with Welsh serving as a partner since September 2015.
- La Fleur Industries, LLC holds investments in rental property and a Crushed Red Southwest franchise, with Welsh as a partner since December 2010.
- 3OE Properties LLC manages real estate investments, with Welsh as managing member since July 2019.
- Eagle Resources Group, LLC involves private securities investments, with Welsh’s involvement beginning in December 2020.
- Quarry Investors 2, LLC represents a passive investment in real estate, with Welsh holding a 1% ownership stake since March 2021.
- Additionally, Welsh serves on the board of directors for Street School, a non-investment related activity he began in May 2020.
The extensive nature of these outside activities—many involving substantial time commitments—raises important questions about potential conflicts of interest and Welsh’s ability to devote sufficient attention to each client’s needs. Investors should inquire about how these various business interests are managed to ensure they don’t adversely affect the quality of investment advice provided.
Legal Options for Investment Loss Recovery
Investors who believe they may have been harmed by unsuitable investment recommendations, inadequate due diligence, or improper disclosures related to alternative investments have several potential avenues for seeking recovery. Understanding these options is essential for protecting your financial interests.
FINRA Arbitration represents the most common dispute resolution mechanism for securities-related complaints. This process is generally faster and less expensive than traditional litigation, with decisions typically rendered within a year. The FINRA arbitration system was specifically designed to handle investment disputes, and arbitrators familiar with securities regulations and industry practices decide the cases. The pending complaint against UBS is proceeding through this system (Docket# 24-01773).
For investors with smaller claims (typically under $50,000), FINRA’s simplified arbitration procedure offers an even more streamlined process that often doesn’t require in-person hearings. This can make recovery more economical for disputes involving more limited damages.
Securities class actions may be appropriate when numerous investors have suffered similar harm from the same misconduct. These collective legal actions allow investors to pool resources and pursue recovery as a group, potentially increasing their leverage in settlement negotiations and sharing legal costs.
Direct negotiation with the brokerage firm sometimes offers the fastest path to recovery. Many firms have internal dispute resolution processes and may be willing to settle legitimate complaints to maintain their reputation and avoid formal proceedings. This approach often works best when the evidence of misconduct is clear and the investor has sophisticated legal representation.
Regulatory complaints to FINRA, the SEC, or state securities regulators represent another option. While these agencies cannot directly order compensation for individual investors, their investigations can uncover evidence useful in private actions and may lead to enforcement actions that pressure firms to establish restitution programs.
Regardless of which path an investor chooses, consulting with an attorney experienced in securities law is crucial. These specialized lawyers can evaluate the strength of potential claims, recommend the most appropriate forum, and guide investors through what can be a complex process. Importantly, investors should be aware of time limitations on bringing claims—most FINRA arbitration claims must be filed within six years of the events giving rise to the dispute.
Our Investment Fraud Recovery Practice
Our law firm specializes in representing investors who have suffered losses due to investment fraud, misrepresentation, and other forms of securities misconduct. We have particular expertise in complex cases involving alternative investments, including fund of funds structures like those at issue in the Todd Charles Welsh matter.
Our attorneys bring decades of combined experience in securities law to every case we handle. We understand the intricate regulatory framework governing investment professionals and use this knowledge to advocate effectively for our clients. Our practice encompasses all varieties of investment fraud claims, including those involving:
- Unsuitable investment recommendations that failed to align with the client’s investment objectives, risk tolerance, time horizon, or financial circumstances.
- Inadequate due diligence by brokers or advisers who recommended investments without conducting appropriate investigation into their merits and risks.
- Material misrepresentations or omissions that provided investors with false or incomplete information about important aspects of an investment.
- Excessive fees or undisclosed compensation arrangements that created conflicts of interest or eroded investment returns.
- Failure to diversify portfolios appropriately, leading to unnecessary concentration risk and avoidable losses.
- Breach of fiduciary duty by investment advisers who failed to act in their clients’ best interests as legally required.
Our approach begins with a comprehensive, no-obligation case evaluation to determine the strength of potential claims and the most effective strategy for recovery. We thoroughly analyze account statements, offering documents, correspondence, and other evidence to build the strongest possible case for our clients.
Throughout the recovery process, we maintain close communication with our clients, ensuring they understand their options and the progress of their case. Our goal is not only to recover investment losses but also to provide peace of mind during what can be a stressful experience.
Contact Us for a Free Consultation
If you’ve invested with Todd Charles Welsh, UBS Financial Services, Scissortail Wealth Management, Level Four Financial, or any other firm and have concerns about alternative investments in your portfolio, we encourage you to contact our experienced investment fraud attorneys for a free, confidential consultation.
Our team can help you:
- Evaluate potential claims related to unsuitable investments
- Assess whether proper disclosures were provided for complex products
- Determine if your financial adviser fulfilled their legal and regulatory obligations
- Understand the applicable time limitations for bringing a claim
- Develop a strategy for pursuing maximum possible recovery
Don’t delay in seeking professional advice about your potential claims. The statute of limitations for investment fraud cases can be as short as one to two years in some circumstances, and critical evidence may become more difficult to obtain as time passes.
Call 800-950-6553 or complete our online form to schedule your no-obligation case evaluation.
Disclaimer: The information provided in this article is based on publicly available records and allegations that have not been proven in a court of law. All individuals are presumed innocent until proven guilty. This article is for informational purposes only and does not constitute legal advice.
