SEC Charges Investment Adviser with Failing to Disclose Conflicts and Orders It to Repay Clients
June 7, 2022
File No. 3-20890
June 7, 2022 - The Securities and Exchange Commission today announced settled charges against a Massachusetts-based registered investment adviser, Trust Advisory Group ("TAG"), for failing to disclose revenue sharing related to clients' funds held in cash sweep vehicles.
The SEC's order finds that TAG breached its fiduciary duty to its advisory clients by failing to disclose that its affiliated broker-dealer, AGES Financial Services, Ltd. ("AGES"), received revenue sharing payments from an unaffiliated clearing broker based on TAG advisory clients' assets held in cash sweep money market funds and bank products. As set forth in the order, TAG also failed to adopt and implement written compliance policies and procedures reasonably designed to prevent this violation.
The SEC's order finds that TAG violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. Without admitting or denying the SEC's findings, TAG agreed to pay disgorgement of $148,255 plus prejudgment interest of $16,204 and a civil penalty of $50,000. TAG also agreed to a cease-and-desist order, to be censured, to distribute the funds to harmed investors, and to comply with certain undertakings.
The SEC's investigation was conducted by Naomi Sevilla and Alicia Reed and supervised by Robert Baker, all of the Asset Management Unit in the Boston Regional Office. John Farinacci, an industry expert in the Asset Management Unit, assisted with the investigation. The investigative team appreciates the assistance of Michael McGrath, Jennifer Moldaver, and Mayeti Gametchu of the Division of Examinations.