The SEC charged an internet-based registered investment adviser with making false claims to investors, breaching its fiduciary duty, and committing related compliance failures.
In its Order, the SEC found that the "robo-adviser," among other things, (i) marketed certain proprietary exchange-traded funds ("ETFs") that did not exist, (ii) made false claims about its rebalancing of client portfolios, (iii) used investor capital to establish its proprietary ETF fund without "prior disclosure to its clients of its preference for and affiliation with" such ETF, and (iv) did not have written policies and procedures in place to assure compliance with the Advisers Act regarding certain marketing materials and disclosure of conflicts of interest.
The SEC determined that the robo-advisor violated IAA Section 206 ("Prohibited transactions by investment advisers"), and IAA Rules 206(4)-1(a) ("Investment Adviser Marketing") and 206(4)-7 ("Compliance Procedures and Practices").
To settle the charges, the robo-advisor agreed to (i) a censure, (ii) a $300,000 penalty, and (iii) comply with the undertakings detailed in the SEC Order.
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