SEC Targets Investment Adviser for Misleading Clients

June 19, 2018

On June 4, 2018 the SEC (Securities and Exchange Commission) issued a press release announcing the imposition of an $8 million civil penalty against an investment adviser in New York for failing to disclose conflicts of interest to its clients. The SEC also announced the filing of a litigated action against two investment adviser representatives of the firm for misleading clients and concealing material conflicts of interest. The investment adviser neglected to disclose agreements with product and service providers that led to the investment adviser receiving undisclosed compensation. The Director of the SEC’s New York Regional Office said, “Investment advisers have an obligation to disclose direct and indirect financial incentives to clients.” Click here to read the SEC’s press release.

As a fiduciary, investment advisers must make full and fair disclosure of all material facts and they must eliminate, or at least disclose, all conflicts of interest. The Form ADV requires the disclosure of all fees and expenses a client may incur and what conflicts of interest exist resulting from such fees and expenses.

RIA Compliance Consultants will host a webinar on Thursday, June 21, 2018 during which we will discuss the importance of providing full, clear, and accurate disclosures regarding fees, expenses, and conflicts of interest. We will offer best practice tips for investment advisers to comply with such disclosure requirements. Click here to register for this webinar. Additionally, we will discuss how to create proper disclosures at our Investment Adviser Compliance Conference on August 22 and 23. Click here to register for our conference.

If your investment advisor firm needs assistance reviewing disclosures regarding fees, expenses, and conflicts of interest, RIA Compliance Consultants can help. Contact your consultant or click here to schedule an introductory call.

Posted by Grant Parr
Labels: SEC