A former independent contractor broker who had been out of the securities industry for nearly two decades was sentenced Tuesday to two years in federal prison for defrauding investors of hundreds of thousands of dollars, according to court documents and a Bloomberg News report.
Kenneth Thom, 42, of Westfield, N.J., pleaded guilty to investment advisor fraud earlier this year. He operated online under the monikers “K Money” and “K$”, presenting himself as a trading “luminary” and a “former Wall Street market maker” with an “illustrious career,” per a parallel complaint filed by the Securities and Exchange Commission (SEC).
Thom’s last registration in the industry was in 2008 with Next Financial Group Inc., a firm that became part of LPL Financial Holdings Inc. when it acquired the Atria Wealth Solutions network in 2023. His BrokerCheck record shows that FINRA suspended him in 2011 for failing to comply with regulatory standards, including non-payment of an arbitration award.
The case highlights growing regulatory scrutiny of “finfluencers” — social media personalities who dispense investment advice. While some partner with legitimate firms, others, like Thom, peddle unregistered products. The trend has led to multiple arrests, as noted in the Bloomberg report.
According to the SEC’s complaint, Thom solicited investors through a Facebook group, inviting them to pool funds in shared accounts that he would trade on their behalf. He promised a 50/50 profit split, with investors sharing the other half pro rata. Instead, he misappropriated approximately $235,000 of the more than $600,000 raised from over fifty investors, spending on luxury goods and a vacation rental.
Thom also misrepresented his trading performance in the so-called Shared Account, the SEC alleged. He faces additional penalties in the SEC’s civil action, which is pending.
The case underscores the dangers of unregulated online investment advice. FINRA has taken steps to address the issue, including a $850,000 fine against M1 Finance in 2024 for violations related to its social media influencer program — the regulator’s first formal enforcement action against a firm for supervision of finfluencers. That action followed a targeted examination of firms’ use of social media to attract customers.
For advisors, the case serves as a reminder of the importance of due diligence and compliance when engaging with social media. As regulators ramp up scrutiny, firms should review their own influencer and marketing practices to avoid similar pitfalls. The SEC’s enforcement division has also seen recent leadership changes, with the departure of Deputy Director Waldon and the return of Nawaz as successor, signaling continued focus on such cases.
