$2.9 Million Charge to RIA for Breach of Fiduciary Duty
SEC RELEASES
Introduction
An RIA was charged by the SEC on April 25th, 2025, for failing to disclose conflicts of interest, violating their fiduciary duty.
While some major changes have been made in the structuring of the SEC’s enforcement division, the Division of Examinations has continued its goal to penalize firms for compliance failures.
What Happened?
According to the SEC:
- The RIA offered Investment Education and Managed Account Services to participants of Employer-Sponsored Retirement Plans in connection with Recordkeeping Services provided to these plans by an affiliate of the Firm.
- Starting in June 2017, the Firm paid incentive compensation to its Retirement Planning Consultants for referring employer plan participants to its Investment Advisor Representatives (IARs).
- The Firm also began paying incentive compensation to its own Advisors when those participants rolled over their assets into advisory accounts.
- Disclosure of this conflict of interest did not occur until February of 2022.
- During the relevant period, approximately 7,300 Employer Plan Participants rolled over approximately $1.2 billion into advisory accounts without disclosure of these conflicts of interest.
- The Firm is ordered to pay the civil monetary penalty into a Fair Fund created for distribution to affected investors who are not affiliated with Respondent.
Vigilant’s Conclusion
Firms are reminded that failing to implement policies and procedures that assess conflicts of interest, and properly address those that arise, can face costly penalties. While new leadership at the SEC may indicate differing priorities, failures to remain compliant are still being heavily penalized.
Vigilant can play a key and strategic role in helping organizations adapt effectively to this new environment. Through our suite of customized and tailored services, we focus on providing Compliance Services around your specific areas of need, whether that be on an on-going or one time basis. Schedule a call with our team today to learn more about how we can help.