SCF Investment Advisors Settles SEC Charges
From the Desk of Jim Eccleston at Eccleston Law LLC:
According to the U.S. Securities and Exchange Commission (“SEC”), SCF Investment Advisors has agreed to settle charges that the firm defraud customers. The SEC alleged that the California-based firm sold mutual funds and cash sweep money market funds to customers that included undisclosed revenue to SCF’s affiliated broker-dealer. The SEC also alleged that these products were more expensive than other available options for the same funds.
The SEC alleged that SCF sold mutual funds to its clients that charged 12b-1 fees, when lower-cost share classes of the same funds were available. The funds received from the 12b-1 fees were received by SCF Securities, Inc., SCF’s affiliated broker-dealer. The SEC also alleged that SCF recommended money market funds that included revenue sharing payments that were received by SCF Securities, without adequate disclosure to its customers. The SEC’s Order found that SCF failed to implement policies and procedures designed to prevent violations of federal securities laws and that the firm violated its duty to seek best execution.
The settlement was made without SCF admitting or denying the SEC’s findings. As part of the settlement, SCF will pay $544,446 in disgorgement, $22,746 of prejudgment interest, and a civil penalty of $200,000.
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