SEC Charges Hudson Valley Wealth Management and Founder for Breach of Fiduciary Duty

On May 14, 2024, The Securities and Exchange Commission (SEC) announced it has settled charges against Hudson Valley Wealth Management Inc., a registered investment adviser based in New York, and its founder. The charges stem from allegations of breaching fiduciary duties by failing to disclose conflicts of interest and providing misleading information to clients.

As part of the settlement, Hudson Valley reportedly agreed to pay a civil penalty of $200,000, while the executive will purportedly pay over $600,000 in disgorgement and prejudgment interest, along with a $150,000 civil penalty.

The SEC’s order states that between September 2017 and October 2021, Hudson Valley and its founder allegedly advised both a private investment fund and individual clients to invest in films produced by a specific film production company.

Conflicts of Interest: Hudson Valley Wealth Management

The executive, through an affiliated entity, allegedly received approximately $530,000 from the production company. This payment was reportedly in exchange for the investments made by the investment fund and individual clients in these same films. Initially, Hudson Valley failed to disclose these payments to their clients. Later, they allegedly misrepresented that the founder earned this compensation for his role as an executive producer on the films.

The SEC’s order notes an incident in May 2021 when Hudson Valley and its founder allegedly fulfilled a redemption request from one investor in the fund but neglected to satisfy several other redemption requests submitted at the same time by different investors.

By prioritizing one investor’s redemption request over others, Hudson Valley and the executive allegedly violated their fiduciary duties to the other clients.

The SEC’s order reportedly concludes that Hudson Valley and its founder violated the antifraud provisions of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder and agreed to cease-and-desist orders and censures.

Breach of Fiduciary Duty

Fiduciary duty is a legal obligation that requires a person or entity to act in the best interest of another party. In the securities industry, this duty is often owed by brokers to their clients. Brokers who owe fiduciary duty to their clients are required to act in the client’s best interest and to avoid conflicts of interest.

This means that a broker must put their clients’ interests ahead of their own and must disclose any potential conflicts of interest that could impact their ability to act in the client’s best interest. Following through on fiduciary duties helps ensure investors are protected from potential conflicts of interest.

Free Consultation

If you are concerned about your investments with Hudson Valley Wealth Management, please call the securities attorneys at The White Law Group at 1-888-637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.

With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment, and financial business transactions attempt to recover their investment losses.