SEC Sanctions One Oak Capital and Advisor for Improper Conversions to Fee Based Accounts

Posted on February 28th, 2025 at 1:42 PM
SEC Sanctions One Oak Capital and Advisor for Improper Conversions to Fee Based Accounts

From the desk of Jim Eccleston at Eccleston Law

The Securities and Exchange Commission (SEC) has penalized a New York-based registered investment adviser and its veteran adviser for converting brokerage accounts into advisory accounts that resulted in significantly higher fees without providing additional services.

Michael DeRosa, 75, and One Oak Capital Management improperly switched more than 180 client accounts between June 2020 and October 2023, according to the SEC settlement. AdvisorHub reports that many of these clients were elderly, longtime customers who previously paid commissions per trade. After the conversion, they faced substantially increased costs, sometimes paying up to seven times more in fees, despite conducting little to no trading for over a year.

According to AdvisorHub, the SEC determined that One Oak and DeRosa violated their fiduciary duty by prioritizing their own financial interests over those of their clients. The firm was ordered to pay a $150,000 civil penalty, while DeRosa agreed to a $75,000 fine and a nine-month suspension. Additionally, DeRosa must retain an independent compliance consultant to review the firm’s policies and procedures.

The SEC’s findings showed that DeRosa and One Oak collected approximately $268,000 in advisory fees from the affected accounts. AdvisorHub also reports that, in some cases, DeRosa allegedly had clients authorize the conversions without fully disclosing the new fee structure.

 

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

Tags: eccleston, eccleston law, sec

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