Callan & Associates has settled charges made by the SEC that the pension consultant firm incompletely disclosed a conflict of interest in an investment adviser registration form. The firm has agreed to obey the SEC’s cease and desist order.
According to the SEC, Callan told clients that BNY Brokerage Inc. is its preferred securities broker, but failed to disclose that Callan received payments based on the amount of commission it could generate from investors for BNY. The SEC says that not revealing this key information resulted in Callan’s disclosure to be misleading.
Callan sent letters to retirement clients every year to let them know that BNY is the firm’s preferred broker and clients could use BNY to pay Callan for services through direct brokerage. The letters, however, failed to reveal that the amount of compensation that Callan received from BNY depended on how much commission came from Callan clients.
Under the Callan-BNY contract, BNY said it would pay Callan an annual fee, which was 8% of what was contingent on BNY’s generating gross brokerage commissions over a certain minimum threshold that had come from Callan clients. This contract was in effect from 1998 until 2006.
The Securities and Exchange Commission told Callan that it needed to cease and desist from violating Section 207 of the 1940 Investment Advisers Act, which makes it illegal to purposely misrepresent or mislead by omission when filing a commission report or in a registration application.
It is against the law for an investment consulting firm or a brokerage company to withhold, exclude, or misrepresent key information or facts about an investment from an investor. If an investor loses money because of an omission or misrepresentation, the consulting company or brokerage firm can be held legally liable.
In the United States, Shepherd Smith and Edwards has helped thousands of clients that have been the victim of investor fraud recover their losses. Contact us online or call us, toll-free, at (800) 259-9010 and ask for your free consultation with one of our experienced securities litigation lawyers.
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