The Securities and Exchange Commission (SEC) has cracked down on five registered investment advisers.
The SEC fined five entities for violating marketing rules in what would be the second wave of regulatory actions in a year.
SEC fines investment advisers
All five firms have held their hands up and agreed to pay the fines imposed on them by the government body. The combined fines total $200,000, and the SEC has also filed other charges.
The SEC's investigations and orders found that “the five firms advertised the hypothetical performance to the general public on their websites without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the situation of potential financial and investment objectives of the goals of each ad. audience, as required by the Marketing Rule.”
The five accused firms are:
- GeaSphere LLC
- Bradesco Global Advisors Inc.
- Credicorp Capital Advisors LLC
- InSight Securities Inc.
- Monex Asset Management Inc.
Co-Head of the Asset Management Unit of the SEC's Enforcement Division. Corey Schuster would comment on tariffs and the importance of regulations in place to protect consumers. He said that “Today's actions show that we will continue to use targeted initiatives to ensure that investment advisers fully comply with their obligations under the rule. They also serve as a reminder of the benefits to firms that take remedial steps before being contacted by Commission staff.
This is the second wave of marketing violations that have been investigated by the SEC. The first wave came to light and nine consulting firms were hit by regulatory scrutiny in September 2023.
The result of the order said “GeaSphere agreed to pay a civil penalty of $100,000. Bradesco, Credicorp, InSight and Monex agreed to pay civil penalties ranging from $20,000 to $30,000, which reflected several remedial steps taken by each of these firms before being contacted by Commission staff.
GeaSphere was hit with the heaviest penalties after they were found to have defrauded the SEC orders. The company made false statements in advertising and failed to fulfill its commitments to consumers.
GeaSphere also violated other regulatory requirements, including making false and misleading statements in advertisements, advertising deceptive model performance, failing to verify the performance shown in its advertisements, and failing to enter into written agreements with people who compensated for endorsements.
The order further finds that GeaSphere committed recordkeeping and compliance violations and made misleading statements about its performance to a registered investment company client “that the misleading statements were included in the client's prospectus filed with the Commission.”
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