Commonwealth Financial Network has become the latest advisory firm to come under the sword of the Securities and Exchange Commission over revenue sharing.
Late Thursday, the SEC charged Commonwealth with breaching its fiduciary duty by failing to disclose that it received over $100 million in a revenue sharing arrangement related to client investments in certain share classes of “no transaction fee” and “transaction fee” mutual funds.
The latest allegation comes about six months after the independent broker-dealer joined 78 other firms in paying a combined $125 million over 12(b)1 fees.
The SEC’s new complaint alleges that Commonwealth breached its fiduciary duty to its clients by failing to disclose the conflicts of interest created by its receipt of compensation through the revenue sharing agreement.
According to the complaint, from at least July 2014 through December 2018, Commonwealth was paid to select and manage investments for its clients, “but failed to tell its clients that some investment choices generated additional multi-million dollar while other similar investment choices would have generated much less, or no, additional revenue.”
Commonwealth, with approximately $85 billion in assets under management, offers its investment advisory services through 2,300 investment advisor representatives and through three Preferred Portfolio Services programs – PPS Custom, PPS Select and PPS Direct.