The Securities and Exchange Commission recently announced the filing of an administrative proceeding against a registered investment adviser and the investment advisers owner/CCO for failing to adopt compliance policies and procedures, a Code of Ethics, and for failing to conduct annual reviews of the same. The advisory firm is Two…
The Securities and Exchange Commission (SEC) recently announced a series of enforcement actions centered on several of the largest broker-dealers in the financial sector. The enforcement actions addressed longstanding failures of the firms and their employees to preserve certain electronic communications. The 15 broker-dealers, and one affiliated investment adviser, admitted…
On June 13, 2022, the Securities and Exchange Commission (“SEC”) issued an order instituting administrative and cease-and-desist proceedings against Charles Schwab & Co., Inc. (“CS & Co.”), Charles Schwab Investment Advisory, Inc. (“CSIA”), and Schwab Wealth Investment Advisory, Inc. (“SWIA”), (collectively, “Schwab subsidiaries”) who submitted an offer of settlement without…
Earlier this month, the Securities and Exchange Commission filed its first-ever civil lawsuit seeking to enforce Regulation Best Interest. The case, filed in a federal district court in California, seeks permanent injunctions, disgorgement with prejudgment interest and civil penalties against broker-dealer Western International Securities Inc. and five of its registered…
While the majority of the Department of Labor’s new fiduciary rule, Prohibited Transaction Exemption 2020-02 (“PTE 2020-02), became enforceable on January 31st, some of the requirements pertaining to rollover recommendations are set to be enforced on July 1, 2022. As detailed in this blog post, the DOL provided transition relief…
Late last year, the SEC announced the settlement of five enforcement cases against RIA firms relating to their recommendations and purchases of complex exchange-traded products (ETPs) in clients’ accounts. The settlements – against Benjamin F. Edwards & Co., Royal Alliance Associates, Inc., Securities America Advisors, Inc, Summit Financial Group, Inc.,…
As illustrated in two recent cases, the SEC’s Enforcement Division continues to root out RIAs that receive excessive undisclosed fees, particularly 12b-1 fees and mutual fund revenue sharing payments. As we have noted repeatedly, the SEC has focused on this issue in the last several years. At issue is whether…
Earlier this summer, the US Supreme Court handed down a highly anticipated decision clarifying the powers of the Securities and Exchanges Commission in civil enforcement proceedings. The court ruled by a margin of 8 to 1 that the SEC can obtain disgorgement from a defendant because disgorgement is a form…
Last week, the Financial Industry Regulatory Authority (FINRA) issued a Letter of Acceptance Waiver and Consent (AWC) censuring Merrill Lynch and ordering $7.2 million in restitution to investor clients. Merrill had already reimbursed the clients as a result of an internal review and had self-reported the underlying violations to FINRA,…
Last month Wells Fargo Advisors Financial Network LLC agreed to settle administrative charges brought by the SEC, and will pay a $35 million civil penalty in order to resolve the matter. According to the allegations, Wells Fargo failed to supervise investment adviser representatives who recommended inverse exchange-traded funds to their…