Published on Oct 11th, 2022 |

SEC Releases

Brief Introduction

Last month, an Investment Adviser was charged by the SEC with a $200,000 civil penalty and required to pay clients $575,589 in restitution for “breaches of fiduciary duty and compliance failures”.

This recent charge demonstrates not only the importance of having proper compliance procedures in place for your Firm, but ensuring that your procedures are properly implemented.

5 Findings and Issues Discovered by the SEC

  1. Marketing brochures offered an “advisory relationship” or a “brokerage relationship” to clients.
  2. Accounts with an advisory relationship were charged larger fees to cover for a range of advising services.
  3. Compliance procedures were in place to identify accounts with limited activity that were not benefiting from the advisory relationship, so they could be changed to a brokerage account.
  4. Compliance procedures were not implemented or followed, causing 737 accounts to be charged $484,645 in unnecessary fees over a 6 year period.
  5. SEC found that the compliance procedures “lacked reasonable coordination [and] oversight”.

Vigilant’s Final Conclusion

Having compliance policies and procedures in this industry is simply not enough to prevent costly fines and reputational damage resulting from SEC rulings. Proper compliance requires the coordination, oversight, and implementation of consistent policies with routine monitoring.

If you are in need of an enhancement to your Compliance Program or need Compliance Support, contact Vigilant today to help alleviate the overall Compliance burden.

Contact Us For Compliance Assistance