SEC Imposes Fines on Advisors for Regulation best Interest (Reg BI) Violations
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange Commission (SEC) has sanctioned two Laidlaw advisors, Richard Michalski and Michael Murray, for violating Regulation Best Interest's care obligation by making recommendations to four retail customers without a reasonable basis.
The SEC order states that the advisors did not have a reasonable basis to believe that the recommended transactions concerning the customers' investment profiles were not excessive. Additionally, the recommendations allegedly prioritized the financial interests of the registered representatives over the interests of the retail customers, thus violating the "quantitative prong" of Regulation Best Interest's care obligation.
According to ThinkAdvisor, the SEC has mandated Laidlaw to pay a total of $822,884.58, including disgorgement of $547,712.36, prejudgment interest of $51,844.22, and civil penalties of $223,328, as a consequence of its failure to supervise the representatives, Michalski and Murray.
Both Michalski and Murray received censures. Michalski faced a six-month suspension from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Additionally, he was required to pay a civil money penalty of $44,253 to the SEC.
Murray was directed to pay disgorgement of $88,506 and prejudgment interest of $4,260.55, totaling $92,766.55. He was further ordered to pay an additional disgorgement of $24,414.17, prejudgment interest of $1,143.91, totaling $25,558.08, and a civil money penalty of $20,000.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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