Michigan RIA, Sigma Planning, reportedly sanctioned for mutual fund conflicts
Sigma Planning Corp., based in Ann Arbor, Michigan, has reportedly reached a settlement with the Securities and Exchange Commission in which the firm will pay $2.5 million in fines and restitution to clients after it faced charges that it allegedly chose mutual funds for clients that gave the firm financial benefits without disclosing its conflicts to clients.
According to the SEC, while lower-cost share classes of mutual funds were apparently available to its clients, Sigma allegedly failed to fully disclose its conflicts relating to select mutual fund share classes for which Sigma was reportedly paid a portion of the annual marketing 12b-1 fees.
Sigma reportedly benefited from selecting these 12b-1 fee share classes, by avoiding to pay its clearing broker an asset-based fee that it would have otherwise had to pay, and allegedly failed to disclose this to clients, according to the SEC’s order.
The SEC further alleges that Sigma failed to disclose the alleged conflicts associated with its broker-dealer affiliates receiving revenue-sharing payments in connection with certain alternative investment products that Sigma purchased for its advisory clients.
Sigma will reportedly pay disgorgement of $1.9 million, interest of $226,000 and a civil penalty of $400,000. The firm neither admitted to nor denied the SEC’s findings in the matter.
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Tags: Sigma Planning Corp. complaints, Sigma Planning Corp. investigation, Sigma Planning Corp. lawsuit, Sigma Planning Corp. losses Last modified: September 23, 2019