The SEC alleged violations in three areas of the advisory business run. Most notably, the firm did not disclose to customers that it was receiving revenue-sharing payments from a brokerage firm that managed a particular category of mutual funds being recommended to the firm's clients. Because the firm received a percentage of every dollar that its clients invested in these mutual funds, there was an incentive to recommend these funds over other investment opportunities in order to generate additional revenue for the firm.
Without admitting or denying the SEC’s charges, the owner and the two advisory firms agreed to pay a combined $1.1 million to settle the case.
If you are not sure if you are in compliance, with SEC or state regulations, hire an experienced securities attorney to represent you and to provide you with the appropriate guidance. The time and energy in preventing a compliance screw-up is a whole lot less than defending an SEC action and paying a significant fine, for the same screw-up. Need help? Email us.
