Madison Avenue Securities Allegedly Failed to Disclose Conflicts with Compensation
According to an SEC order on May 31, the Securities and Exchange Commission ordered Madison Avenue Securities (CRD#: 23224/SEC#: 801-69919,8-40426) to pay more than $800,000 to settle charges that it breached its fiduciary duty with its mutual fund share-class selection practices as well as conflicts with mutual fund compensation, including cash sweep money market funds.
The regulator found that since February 2016, Madison Avenue Securities allegedly failed to disclose conflicts in connection with compensation the firm received from certain advisory client investments, including: cash sweep money market funds for which Madison received revenue sharing; mutual funds that resulted in Madison Avenue receiving fees from at least February 2016 through April 2018, when lower-cost share classes of the same funds became available to those clients; and no-transaction-fee mutual funds for which Madison Avenue also received revenue sharing.
Madison Avenue Securities agreed to pay $580,000 in disgorgement, $74,000 in prejudgment interest and a $150,000 fine, according to the order.
In February 2018, the SEC launched its Share Class Selection Disclosure Initiative to encourage firms to self-report for recommending high-fee mutual funds (12B -1 fees) to their clients when lower fee options were available. Madison Avenue Securities reportedly failed to self-report in connection with the 12B-1 fees, according to the order.
To learn more about the firm please see: Madison Avenue Securities Review – Broker Fraud, Lawsuits and Regulatory Actions
Potential Lawsuits to Recover Financial Losses
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Tags: Madison Avenue Securities 12b-1 fees, Madison Avenue Securities FINRA, Madison Avenue Securities lawsuit, securities fraud attorneys Last modified: June 2, 2022