Adviser and CCO Sanctioned for Commission Kickbacks Received for Directing Trades
An investment adviser and its President/CCO were censured and fined for receiving and failing to disclose certain payments from a proprietary trading firm with whom the respondent combined trades. The SEC alleges that the respondent agreed to combine futures trades for the private funds it managed with a proprietary trading firm that needed volume to obtain a better commission rate. The proprietary trading firm agreed to pay the respondent 50 cents per trade. The SEC alleges that the respondent unlawfully kept the money for itself even though it was obtained with fund assets and failed to disclose the arrangement. The SEC also charged compliance failures.
OUR TAKE: The SEC could have added several other charges including failure to ensure best execution and operating as an unregistered broker-dealer.