SEC Charges Two Investment Advisers with Unlawful Proxy Voting of Client Securities
Sept. 27, 2019
File Nos. 3-19538 and 3-19539
September 27, 2019 - The Securities and Exchange Commission today announced settled charges against two registered investment advisers, New York-based Amadeus Wealth Advisors LLC and California-based Three Bridge Wealth Advisors LLC, for the unlawful proxy voting of client securities.
The SEC's orders find that on two separate occasions in 2015, Amadeus and Three Bridge both voted client proxies notwithstanding representations in their client advisory agreements and regulatory filings with the SEC that they would not accept or exercise proxy voting authority over client securities. Both firms managed mainly retail accounts during that period. According to the SEC's orders, at the request of representatives of the same registered broker-dealer, Amadeus and Three Bridge each executed and returned to the broker-dealer letters voting proxies for numerous clients in securities of issuers affiliated with that broker-dealer. In each instance, the advisory firms cast their clients' votes in favor of the proposition at issue for the proxy being solicited on behalf of the issuer. Neither advisory firm made any disclosure to any of the clients or sought authority to vote those clients' proxies prior to executing and returning the letters to the broker-dealer. Amadeus voted client proxies without authority for a total of 20 client accounts, while Three Bridge did so for over 65 client accounts.
The SEC's orders find that Amadeus and Three Bridge violated Section 206(2) of the Investment Advisers Act of 1940 by engaging in this conduct. Without admitting or denying the SEC's findings, Amadeus and Three Bridge each consented to a cease-and-desist order and agreed to pay civil monetary penalties of $40,000 and $60,000, respectively.
The SEC's investigation, which is ongoing, has been conducted by Ladan Stewart, Chevon Walker and George Stepaniuk of the SEC's New York office. The case is being supervised by Sanjay Wadhwa.