On October 28, 2022, a federal district court in Pennsylvania entered final judgments against Defendant McDermott Investment Advisors, LLC ("MIA"), a registered investment adviser; Defendant Dean Patrick McDermott, MIA's owner and principal; and Relief Defendant McDermott Investment Services, LLC ("MIS"), McDermott's and MIA's affiliated broker-dealer. The judgments order the Defendants and Relief Defendant to pay over $350,000 in disgorgement, prejudgment interest, and civil penalties, broken down as follows: (1) McDermott, MIA, and MIS jointly and severally must pay $143,379.33 in disgorgement; (2) McDermott, MIA, and MIS jointly and severally must pay $50,983.60 in prejudgment interest; (3) MIA must pay $110,000 in civil penalties; and (4) McDermott must pay $50,000 in civil penalties.

The judgments follow a July 12, 2022, jury verdict finding that Defendants MIA and McDermott violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 by breaching fiduciary duties in connection with their selection of unit investment trusts imposing an avoidable transactional sales charge on their advisory clients, notwithstanding the availability to clients of an otherwise identical version of the same unit investment trusts that did not impose those charges. This resulted in MIS's receipt of unlawful revenue in the form of the vast majority of the avoidable transactional sales charges. The jury also found McDermott liable for aiding and abetting MIA's primary violations of Sections 206(1) and 206(2).

The litigation was handled by Christopher R. Kelly, Gregory R. Bockin, and John T. Crutchlow in the SEC's Philadelphia Regional Office. The SEC's investigation that led to this action was conducted by Matthew S. Raalf and was supervised by Assunta Vivolo, both of whom are also in the SEC's Philadelphia Regional Office.