79 Different Brokers and Investment Advisors have settled charges that they engaged in numerous violations including mutual fund over-charges and undisclosed conflicts of interest that cost investors over $125 million.1 These charges harm investors by unfairly exposing them to fees that chip away at the value of their investments. The brokers agreed to pay over $125 million to the Securities and Exchange Commission (SEC) which will be returning funds to investors. https://www.sec.gov/news/press-release/2019-28.
Over-charges in the sale of mutual fund shares have cost retirement plan holders and investors billions of dollars.2 In order to curb ongoing harm to investors the SEC set up a program that incentivized self-reporting by brokers and investment advisors.
The SEC found that, even though lower-cost mutual fund share classes of the same fund and representing an interest in the same portfolio of securities were available to their clients, the brokers and investment advisers placed their clients in higher-cost mutual fund shares that charged excessive and recurring fees. Those excessive fees were then deducted from the investor's assets. The fees, meanwhile, were routinely paid to the investment advisers in their capacity as brokers, to their broker-dealer affiliates, or to their personnel who were also registered representatives.
The advisory failures addressed in the latest SEC orders are just the most recent in ongoing findings addressing this harmful practice in mutual fund sales. Since 2013, the SEC and Financial Industry Regulatory Authority (FINRA) have sanctioned at least 100 broker dealers for similar fiduciary violations.
These kinds of fee structures create a conflict of interest between the advisors and their clients because the investment advisers stood to benefit from the clients' paying higher fees. Moreover, the SEC's Division of Enforcement, noted: "An adviser's failure to disclose these types of financial conflicts of interest harms retail investors by unfairly exposing them to fees that chip away at the value of their investments."
A 2015 Study by the White House Council of Economic Advisors concluded that "conflicted advice costs Americans about $17 billion in foregone retirement earnings each year."3
Rodriguez Tramont & Nuñez, P.A. has collected millions of dollars for 401k retirement plan investors and other investors who were charged excessive mutual fund fees by their brokers.
1 Firms Charged:
- Ameritas Investment Corp.
- AXA Advisors LLC
- BB&T Securities LLC
- Beacon Investment Management LLC
- Benchmark Capital Advisors LLC
- Benjamin F. Edwards & Co. Inc.
- Blyth & Associates Inc.
- BOK Financial Securities Inc.
- Calton & Associates Inc.
- Cambridge Investment Research Advisors Inc.
- Cantella & Co. Inc.
- Client One Securities LLC
- Coastal Investment Advisors Inc.
- Comerica Securities Inc.
- Commonwealth Equity Services LLC
- CUSO Financial Services LP
- D.A. Davidson & Co.
- Deutsche Bank Securities Inc.
- EFG Asset Management (Americas) Corp.
- Financial Management Strategies Inc.
- First Citizens Asset Management Inc.
- First Citizens Investor Services Inc.
- First Kentucky Securities Corporation
- First National Capital Markets Inc.
- First Republic Investment Management Inc.
- Hazlett, Burt & Watson Inc.
- Hefren-Tillotson Inc.
- Huntington Investment Company, The
- Infinex Investments Inc.
- Investacorp Advisory Services Inc.
- Investmark Advisory Group LLC
- Investment Research Corp.
- J.J.B. Hilliard, W.L. Lyons LLC
- Janney Montgomery Scott LLC
- Kestra Advisory Services LLC
- Kestra Private Wealth Services LLC
- Kovack Advisors Inc.
- L.M. Kohn & Company
- LaSalle St. Investment Advisors LLC
- Lockwood Advisors Inc.
- LPL Financial LLC
- M Holdings Securities Inc.
- MIAI Inc.
- National Asset Management Inc.
- NBC Securities Inc.
- Next Financial Group Inc.
- Northeast Asset Management LLC
- Oppenheimer & Co. Inc.
- Oppenheimer Asset Management Inc.
- Park Avenue Securities LLC
- PlanMember Securities Corporation
- Popular Securities LLC
- Principal Securities Inc.
- Private Portfolio Inc.
- ProEquities Inc.
- Provise Management Group LLC
- Questar Asset Management Inc.
- Raymond James Financial Services Advisors Inc.
- Raymond Lawrence Lent (d/b/a The Putney Financial Group, Registered Investment Advisors)
- RBC Capital Markets LLC
- Robert W. Baird & Co. Incorporated
- Ryan Financial Advisors Inc.
- SA Stone Investment Advisors Inc.
- Santander Securities LLC
- Select Money Management Inc.
- Silversage Advisors
- Sorrento Pacific Financial LLC
- Spire Wealth Management LLC
- SSN Advisory Inc.
- Stephens Inc.
- Stifel, Nicolaus & Company Incorporated
- Summit Financial Group Inc.
- Syndicated Capital Inc.
- TIAA-CREF Individual & Institutional Services LLC
- Transamerica Financial Advisors Inc.
- Trustcore Financial Services LLC
- Wells Fargo Clearing Services LLC
- Wells Fargo Advisors Financial Network LLC
- Woodbury Financial Services Inc.
2 The Effects of Conflicted Investment Advice on Retirement Savings, White House Council of Economic Advisors, February, 2015 p. 21 ("conflicted advice costs Americans about $17 billion in foregone retirement earnings each year.")
3 The Effects of Conflicted Investment Advice on Retirement Savings, White House Council of Economic Advisors, February, 2015.