TIAA Settles SEC Charges for Violating Reg BI

Posted on March 21st, 2024 at 2:02 PM
TIAA Settles SEC Charges for Violating Reg BI

From the desk of Jim Eccleston at Eccleston Law 

The Teachers Insurance and Annuity Association of America (TIAA) has agreed to a $2.2 million settlement with the Securities and Exchange Commission (SEC) over allegations of violating Regulation Best Interest (Reg BI) in recommending investment options to clients opening individual retirement accounts (IRAs).

According to the SEC, TIAA's broker-dealer, TC Services, failed to inform IRA account holders about lower-cost options available to them, resulting in approximately 6,000 retail clients paying over $900,000 in combined expenses unnecessarily. AdvisorHub reports that TIAA offered two investment menus for IRAs: a pre-selected "core menu" and a "brokerage window" with broader and lower-cost choices. However, clients were not adequately informed about the brokerage window option, leading to the majority investing solely in core products.

The violations occurred from June 2020, when Reg BI was enacted, until November 2021. TIAA, without admitting or denying the findings, agreed to a censure, cease-and-desist order, and monetary penalties totaling $2.2 million, including disgorgement, prejudgment interest, and a civil penalty. Despite TIAA's remedial efforts and disclosure of the issue during an examination, the SEC emphasized the importance of complying with Reg BI and related obligations.

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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