SEC takes action on issues involving RIA conflicts of interest

On Behalf of | Sep 1, 2021 | Regulatory Investigations

The Securities and Exchange Commission took enforcement action recently against rule violations regarding forgivable recruitment loans, according to JD Supra.

In June, the SEC announced charges against Verus Capital Partners, LLC, for failing to disclose that its investment adviser representatives had received more than $1 million in revenue in the form of forgivable recruitment loans from a third-party broker-dealer and its affiliates over a ten-year period. The SEC concluded that Verus, an Arizona-based investment adviser, did not disclose the conflicts of interest that were created by the loan forgiveness given to its investment adviser representatives.

The commission found that Verus had violated Section 206(2) of the Investment Advisers Act of 1940. Verus did not admit or deny the findings, but consented to the SEC’s sanctions of a censure, a $45,000 penalty, an order to cease and desist from future violations, and the retention of an independent compliance consultant.

The SEC said the order reflected its continued focus on undisclosed compensation arrangements between investment advisers and broker-dealers.

Lewitas Hyman represents financial professionals, financial institutions and investors in investment loss, employment and disclosure matters, and in regulatory investigations. Contact us by phone at (888) 655 6002 or through our online contact form for a free consultation.

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