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SEC hits investment advisors for violation of selling rules | Entrepreneur

The Securities and Exchange Commission (SEC) has cracked down on five registered investment advisers.

The SEC imposed fines on five entities for violating marketing rules in what could be the second wave of regulatory motion within the space of a yr.

SEC fines investment advisors

All five firms have held their hands up and agreed to settle the penalties levied on them by the federal government body. The combined fines are available at $200,000 and the SEC has also imposed other charges.

The SEC’s investigations and orders found that “the five firms advertised hypothetical performance to most of the people on their web sites without adopting and implementing policies and procedures reasonably designed to be sure that the hypothetical performance was relevant to the likely financial situation and investment objectives of every commercial’s intended audience, as required by the Marketing Rule.”

The five firms charged are:

  • GeaSphere LLC
  • Bradesco Global Advisors Inc.
  • Credicorp Capital Advisors LLC
  • InSight Securities Inc.
  • Monex Asset Management Inc.

Co-Chief of the SEC Enforcement Division’s Asset Management Unit. Corey Schuster would comment on the fees and the importance of the principles in place to safeguard consumers. He said “Today’s actions show that we’ll proceed to employ targeted initiatives to be sure that investment advisers fully comply with their obligations under the rule. They also function a reminder of the advantages to firms that take corrective steps before being contacted by Commission staff.”

This is the second wave of selling rule breaches which were investigated by the SEC. The first wave was dropped at light and nine advisory firms were hit with regulatory scrutiny in September 2023.

The order result would say “GeaSphere agreed to pay a civil penalty of $100,000. Bradesco, Credicorp, InSight, and Monex agreed to pay civil penalties starting from $20,000 to $30,000, which reflected certain corrective steps taken by each of those firms before being contacted by the Commission staff.”

GeaSphere was hit with the heaviest penalties as they were found to have misled the orders of the SEC. The company made false statements in advertisements and will not make good on its commitments to consumers.

GeaSphere also violated other regulatory requirements, including by making false and misleading statements in advertisements, promoting misleading model performance, being unable to substantiate performance shown in its advertisements, and failing to enter into written agreements with people it compensated for endorsements.

The order further finds that GeaSphere committed recordkeeping and compliance violations and made misleading statements about its performance to a registered investment company client “that the misleading statements were included within the client’s prospectus filed with the Commission.”

Image: Ideogram.


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