Private Advisor Group LLC settles with SEC for $5.8 Million  

SEC Charges Private Advisor Group with Alleged violations related to Mutual Fund Share Class selection and 12b-1 Fees 

According to an administrative order on July 21, 2022, the Securities and Exchange Commission charged Private Advisor Group LLC, a registered investment advisor, with allegedly investing some of its clients’ assets in higher-cost mutual fund share classes despite less costly ones being available, without disclosing the conflicts of interest involved. 

Beginning in 2014, Private Advisor Group and its representatives purportedly avoided transaction fees for wrap client transactions by putting clients’ funds in share classes from a no-transaction fee program offered by its clearing firm, some of which charged 12b-1 fees, according to the SEC. Consequently, the firm reportedly breached its duty of care including duty to seek best execution. 

Private Advisor Group agreed to the sanctions of a cease and desist and a civil penalty of $5.8 million. 

The SEC has been reaching numerous multi-million-dollar settlements with firms since it first introduced its self-reporting amnesty program in 2018 in connection with revenue-sharing and conflicts of interest disclosures.  

To learn more, see: O.N. Investment Management Company Reportedly Fined for High Mutual Fund… or SEC Charges Western International & Reps with Reg BI Violations… 

RIAs are Required to Disclose Conflicts of Interest 

Registered investment advisors are obligated to disclose all material facts to their advisory clients, including any conflicts of interest between it and its clients, which could affect the advisory relationship.  

Firms are also required to disclose all material facts relating to how those conflicts could affect the advice their associated people provided their clients. They are also obligated to provide advisory clients with full disclosure so that the clients would have an informed basis on which they could make decisions regarding any conflicts.  (To learn more see Registered Investment Advisor (RIA) – Securities Fraud Attorneys)   

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For a free consultation with a securities attorney, please call the White Law Group at (888) 637-5510.