SEC Fines Dually Registered Advisers/Brokers

WASHINGTON (CN) - The SEC fined two investment firms a total of $1.5 million for failing to seek the best execution of trades for their clients.

The cases are similar in that they are both dually registered, as investment advisers and broker-dealers.

A.R. Schmeidler & Co., of New York City, was fined $1 million.

Schmeidler, which the SEC refers to as ARS in its 8-page order, increased its share of commissions from 4.8 cents per share traded to 5.4 cents per share, on taxable accounts, the SEC said in its cease and desist order. ARS then failed to "conduct sufficient analysis to determine whether it properly sought best execution for trades executed on behalf of advisory clients with taxable accounts," the SEC wrote.

As a result of the conduct described above, ARS willfully violated Section 206(2) of the Advisers Act, which makes it unlawful for an adviser to engage in any transaction, practice, or course of business that operates as a fraud or deceit upon any client, by failing to conduct a sufficient best execution analysis," according to the SEC complaint.

ARS must disgorge $757,877, plus $78,689 in interest, and pay a $175,000 penalty, for a total of $1,011,566.

In the second case, Gregory W. Goelzer and his Indianapolis firm Goelzer Investment Management were fined nearly $500,000 for misrepresenting the process by which they selected themselves as brokers for advisory clients. Goelzer recommended himself as broker without evaluating other firms, as he and his company promised they would, the SEC said.

Golezer was ordered to disgorge $309,994, with $53,799 in interest, plus fines of $135,000, for a total of $498,793.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit