SEC Sanctions BB&T for Valley Forge Asset Management Alleged Misdeeds

According to the Securities and Exchange Commission, on March 5^th, the regulator announced that BB&T Securities has agreed to return more than $5 million to retail investors and pay a $500,000 penalty to settle charges involving Valley Forge Asset Management.

According to the complaint, Valley Forge allegedly misled its advisory clients into believing they were receiving full service brokerage services in-house at a discount while significantly less expensive options were available externally.

The SEC alleges that Valley Forge Asset Management used misleading statements and inadequate disclosures about its brokerage services and prices to convince customers to choose the in-house broker.

According to the SEC’s order, despite promises of a high level of service at a low cost,  Valley Forge purportedly did not provide any additional services to advisory clients using its in-house brokerage than it did to advisory clients who chose other brokerages with significantly lower commission rates.

Valley Forge allegedly charged commissions averaging roughly 4.5 times more than what clients would have paid using other brokerage options, and the firm purportedly obscured the price difference by claiming that it was giving clients a 70 percent discount off of its supposed retail commission rate.

Without admitting or denying the findings, BB&T Securities reportedly consented to a cease-and-desist order, a censure, and agreed to pay disgorgement of $4,712,366 and prejudgment interest of $497,387, which it will distribute to affected current and former clients through a Fair Fund, as well as a $500,000 penalty.

BB&T Securities has reportedly ended Valley Forge’s existing directed brokerage program by amending its cost structure and its disclosures.

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