SEC Charges Investment Advisory Firm and Co-Owners with Failing to Disclose Conflict of Interest to Clients (with Lofchie Comment)

The SEC settled charges against an investment advisory firm for recommending that clients invest in particular mutual funds without disclosing a key conflict of interest; i.e., that the adviser received a percentage of every dollar that its client invested in the mutual fund through an undisclosed agreement with a brokerage firm.

Lofchie Comment: The adviser was fortunate not to be charged with acting as an unregistered broker-dealer in light of its receipt of transaction-related compensation.

See: SEC Order.