The SEC charged an investment advisory firm and its principal and sole owner for defrauding advisory clients.
In a suit filed before the United States District Court for the Eastern District of Pennsylvania, the SEC alleged that the investment advisory firm invested clients in a version of unit investment trusts ("UIT") that charged transaction sales charges when an identical UIT without sales charges was available. The SEC claimed that by selecting the UITs with transaction charges, the investment advisory firm caused clients to pay unnecessary transactional sales charges of which the firm's affiliated broker-dealer was the beneficiary of these payments. The SEC claimed that the firm and its principal violated their duty to seek best execution of the trades and failed to disclose all material conflicts of interest. The Complaint also named the investment advisory firm's affiliated broker-dealer as a relief defendant.
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