SEC Charges Investment Adviser for Failing to Fully Disclose Affiliate Compensation Arrangement
Sept. 7, 2018
File No. 3-18730
September 7, 2018 - The Securities and Exchange Commission today announced charges against investment adviser BB&T Securities, LLC for failing to adequately disclose material conflicts of interest arising out of a compensation arrangement with an affiliated investment adviser. BB&T Securities, LLC, which is successor to BB&T Investment Services, Inc., has agreed pay a $100,000 penalty to settle the charges.
According to the SEC's order, for over three years, BB&T Investment Services recommended to its clients that they invest in wrap fee programs sponsored by three other investment advisers (sponsors), one of which was an affiliate of BB&T. In connection with these recommendations, BB&T did not disclose sufficient facts to enable clients to determine that the compensation arrangement between BB&T and its affiliated adviser created a financial incentive for BB&T to recommend that clients invest in the affiliated adviser's wrap fee program rather than the programs offered by two unaffiliated sponsors.
The SEC's order finds that BB&T violated the antifraud provisions of Section 206(2) of the Investment Advisers Act of 1940. Without admitting or denying the findings in the SEC's order, BB&T consented to the entry of a cease-and-desist order and agreed to pay a $100,000 civil penalty.
The SEC's investigation was conducted by Yolanda Ross and Matthew McNamara of the Atlanta Regional Office. The SEC's examination that led to the enforcement referral in this matter was conducted by Kee Han, Robert Cowdin, Dale Perez and Anthony Russell.