Published on Jul 18th, 2025 |

RIA Charged Nearly $2 Million for Multiple Compliance Failures

SEC Releases

Introduction

On July 11, 2025, the SEC charged a New York RIA for failing to disclose conflicts of interest, overbilling clients, and through its Former CCO and President they backdated compliance documents providing them to SEC Staff during a Compliance Examination.

Disclosure violations have been a recent trend in SEC charges as they pursue their goal of providing protection for investors.

Any fees charged to clients must be transparent and described in the Investment Advisory Agreement (IMA). These charges resulted in civil penalties and censure for the Firm, the Former CCO, and Former President.

What Happened?

What Happened?

According to the SEC:

  • A Clearing Broker (Broker A) provided clearing and custody services for most of the Firm’s clients.
  • A Broker affiliated with the RIA (Affiliated Broker) received compensation from Broker A’s transaction fees and other fees charged to the Affiliated Broker’s customers.
  • The Affiliated Broker’s fees were its own markups for trade execution and account services to the Clearing Broker’s charges.
  • The Firm disclosed in ADV Part 2A that there was inherent conflicts of interest, disclosing the incentive to recommend use of the Affiliated Broker as Introducing Broker and Broker A as Clearing Broker, but it did not disclose the extent of the conflict of interest and cost to the client.
  • The ADV Part 2A omitted that markups on various types of services and transactions would create additional costs to clients.
  • Despite the alternative investment disclosure stating that clients would not be charged an advisory fee on alternative investment positions, the Firm billed and collected fees on these positions.
  • Prepaid quarterly advisory fees were collected from clients, but there was no process to refund a pro rata portion of fees if clients terminated their account despite the client agreements that specifically provided such a refund.
  • During examination, the CCO created three documents styled as “Annual Compliance Calendars” then signed and backdated them for 2018, 2019, and 2020.

Vigilant's Conclusion

Vigilant’s Conclusion

SEC Examinations can be stressful for Firms that are not adequately prepared. Firms can create more regulatory headaches for themselves by scrambling to provide documentation in the hopes of surviving an SEC Examination.

For this reason, Vigilant provides Mock SEC Examinations among a list of other important on-going Compliance Services to help your firm be prepared.

Firms that are in the window for an examination should consider this Service; it is not a matter of if the SEC will reach out for an examination, but when.

Firms should also ensure that the fees being charged to clients agree with all the descriptions in the IMA. Any conflicts of interest need to be disclosed accurately and completely.

Contact Vigilant today to learn more about how we can help with your specific needs.

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