A North Carolina-based funding advisor overcharged shoppers’ advisory charges by at the least $367,000, in keeping with a brand new order from the Securities and Alternate Fee.
The SEC charged Stephen Brandon Anderson of the now-defunct River Supply Wealth Administration with fraud, claiming he overcharged shoppers by about 40% greater than the agreed-upon most.
The regulator additionally says he misled shoppers as to why the agency’s longtime custodian stopped doing enterprise with him and inflated River Supply’s belongings below administration by hundreds of thousands in 2015 and 2016 in disclosure kinds submitted to the Fee.
“When advisors breach their responsibility to shoppers by deceptive and overcharging them, they will count on the SEC will craft a bundle of cures that can compensate harmed traders, present extra safeguards for potential traders, and deter related conduct,” mentioned Carolyn M. Welshhans, the affiliate director for the SEC’s Enforcement Division.
Anderson co-founded River Supply Wealth Administration in 2009 and have become its sole proprietor in 2013, in keeping with the SEC. Anderson charged advisory charges which had been to be a share of every shopper’s AUM and included in a price schedule signed by Anderson and every shopper. Nonetheless, in 2015 and 2016 he overcharged at the least $185,816 and $181,360 in charges, respectively, charging nearly all of his shoppers greater than the agency’s most established price price in each years. Anderson filed for private chapter in November 2016 and is now an funding advisor consultant at Foundations Funding Advisors, in keeping with the SEC order (most of his shoppers continued with him after River Supply ended). He provided advisory providers by Balsam Capital Group, which the SEC mentioned he developed to market his providers, each with Foundations Funding Advisors and beforehand River Supply.
Ernest J. C'DeBaca, the general counsel and chief compliance officer at Foundations Funding Advisors, mentioned that whereas the agency was conscious there was an investigation underway, the order's contents had been extra stunning than anticipated, and the agency was terminating its relationship with Anderson.
Balsam Capital Group didn't instantly return a request for remark.
On River Supply’s Varieties ADV despatched to the SEC, he overstated the agency’s AUM whole by $34 million in 2015, and by $61 million in 2016, in keeping with the SEC. He additionally didn't disclose two earlier lawsuits filed towards him by earlier River Supply shoppers, as he was mandated to do.
He advised shoppers that he had an ‘amicable’ break along with his longtime custodian, however in keeping with the SEC, the custodian stopped working with Anderson “after it seen irregular billing practices, requested paperwork to help sure expenses and didn't obtain these paperwork.” Lastly, the SEC claims he didn't maintain sufficient books and information throughout this time and didn't implement compliance insurance policies.
Anderson agreed to produce present and potential shoppers with a duplicate of the SEC order and to put up a duplicate on his web site. Anderson will not be allowed to behave in a supervisory or compliance capability or to cost advisory charges for 3 years, and he pays a disgorgement and prejudgment curiosity of $405,381 and a $100,000 penalty. Anderson agreed to the SEC’s order with out admitting or denying the findings.
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