The Securities and Exchange Commission has charged three investment advisors for failing to put in place compliance procedures designed to prevent securities law violations.
The Securities and Exchange Commission has charged OMNI Investment Advisors, Feltl & Company, and Asset Advisors, along with OMNI’s owner Gary Beynon, for failing to put in place compliance procedures designed to prevent securities law violations.
The charges were made by the SEC Enforcement Division’s asset management unit, which says it is ensuring visible compliance programs are in place at firms, as part of its initiative to proactively prevent investor harm. The initiative requires by law that investment advisors implement written compliance policies and procedures in an attempt to curtail other securities law violations with more disastrous outcomes.
OMNI Investment Advisors and Beynon failed to adopt and implement written compliance policies and procedures after the SEC informed OMNI of its deficiencies, according to the SEC’s order in the case against the firm. Between September 2008 and August 2011, OMNI allegedly had no compliance program and advisory representatives were unsupervised.
Beynon has agreed to pay a $50,000 penalty, along with a permanent barring from acting in a compliance or supervisory capacity within the securities industry and from associating with any investment company. OMNI has agreed, along with its settlement, to provide a copy of the SEC order to all former clients from September 2008 to August 2011.
The Commission charged Feltl & Company for failing to adopt and implement written compliance policies and procedures for its growing advisory business. The firm engaged in hundreds of principal transactions with its advisory clients’ accounts without informing them or gaining consent, as required by law, the SEC says. Feltl also improperly charged undisclosed commissions on certain transactions in clients’ wrap fee accounts.
It has agreed to pay a penalty of $50,000 and return over $142,000 to certain clients. Additionally, the firm will hire an independent consultant to review its compliance operations annually for the next two years, provide a copy of the SEC’s order to all clients, and post a summary of the order on its website.
Asset Advisors was found failing to adopt and implement a compliance program by the SEC. When brought to the firm’s attention by the SEC, Asset Advisors allegedly adopted policies and procedures but never fully implemented them.
It has agreed to pay a $20,000 penalty, cease operations, de-register with the SEC, and move advisory accounts to a firm with an established compliance program.
OMNI and Asset Advisors had been previously warned by the SEC regarding compliance deficiencies.
In a statement on the charges, the SEC highlighted the link between compliance failures and the proliferation of fraud.
“Not all compliance failures result in fraud, but many frauds take root in compliance deficiencies,” said Robert Khuzami, director of the SEC’s division of enforcement.
“That simple truth underlies our renewed focus on identifying and charging firms and individuals that fail their legal obligations to maintain adequate compliance programs,” he added.