SEC Fines RIA $5.8 Million Over 12b-1 Fee Infractions Tied to Wrap Accounts

Posted on August 5th, 2022 at 1:24 PM
SEC Fines RIA $5.8 Million Over 12b-1 Fee Infractions Tied to Wrap Accounts

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has imposed a $5.8 million fine against Private Advisor Group over 12b-1 fee violations tied to its wrap fee program.

Private Advisor Group, a New Jersey-based registered investment advisory (RIA) firm, allegedly invested client assets in higher-cost mutual fund share classes instead of cheaper, alternative options while additionally failing to disclose conflicts of interest related to the investment recommendations. According to the SEC, the firm holds at least $34 billion in assets under management. Private Advisor Group also offered a wrap program to its clients, which obligated the firm to pay client trading costs, including transaction fees on mutual fund investments. However, Private Advisors Group allegedly deducted any transaction fees incurred in wrap accounts directly from the advisor’s compensation, according to the SEC.

The SEC further alleged that Private Advisors Group had been dodging transaction fees for wrap client transactions since at least July 2014. Some of the recommended mutual fund share classes charged 12b-1 fees while cheaper share classes of the same fund were available to clients via a clearing firm for a transaction fee. According to the SEC, Private Advisors Group failing to furnish fair disclosure to clients concerning its mutual fund share class recommendations and its related conflicts of interest.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors

Return to Archive

TESTIMONIALS

Previous
Next

If the regulators are after you, and are trying to make a case against you, and you are going to contest their allegations against you, make sure you have the best securities industry defense lawyers, Eccleston Law Firm. My case was spun into a combination of penalties including fines, cash settlements, CE courses and suspension. They were the best I have seen in action. When all was said and done, they had done their magic, my situation was negotiated and settled with a simple "letter of caution" and a case closed without action. It is the most important legal business decision you will ever make, make it Eccleston Law.

Rick R.

LATEST NEWS AND ARTICLES

October 30, 2025
SEC Sues Former Franchise Group CEO Over $350 Million Hedge Fund Fraud

The Securities and Exchange Commission (SEC) filed a lawsuit against Brian Kahn, former CEO of Franchise Group Inc., alleging he defrauded investors of more than $350 million in a multi-year investment adviser fraud tied to the collapse of Prophecy Asset Management (Prophecy).

October 29, 2025
FINRA Foundation Study Reveals Alarming Investor Susceptibility to Fraudulent Offers

The FINRA Investor Education Foundation (FINRA Foundation) has released preliminary findings from its upcoming report, Investors in the United States: A Report of the National Financial Capability Study.

October 28, 2025
UBS Seeks Court Order Against $1.4 Billion Florida Advisory Team Over Client Solicitation Allegations

UBS Wealth Management USA has filed a lawsuit and requested a temporary restraining order (TRO) against a $1.4 billion advisory team that recently departed to join Elevation Point, a West Palm Beach-based registered investment advisor launched just 15 months ago.