Close Close
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

SEC Orders Massachusetts Firm to Pay $700K Over Cash Sweep Conflicts

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • The SEC ordered Cantella & Co. to pay disgorgement of $536,953 over cash sweep conflicts of interest.
  • The firm was also ordered to pay prejudgment interest of $64,677 and a civil monetary penalty in the amount of $100,000.
  • Cantella provided no disclosure of the conflict of interest arising from the firm’s receipt of revenue-sharing payments.

The Securities and Exchange Commission has ordered a Malden, Massachusetts-based dually registered investment advisor firm and broker-dealer to pay a total of $701,630 over how it invested clients’ cash.

In an order filed on Monday, the SEC alleged that, since at least 2016, Cantella & Co. put clients’ cash into cash sweep products from which it collected revenue-sharing payments.

In anticipation of the institution of the order, the firm submitted a settlement offer that the SEC decided to accept, the commission said.

The $701,630 that the firm was ordered to pay includes disgorgement of $536,953, prejudgment interest of $64,677 and a civil monetary penalty in the amount of $100,000, the SEC said. The firm was also censured and ordered to cease and desist from committing or causing any violations and future violations of the Advisers Act.

Cantella & Co. did not immediately respond to a request for comment Wednesday.

Among other things, the firm agreed to review and correct as necessary all relevant disclosure documents concerning sweep account revenue sharing within 30 days; evaluate whether clients should be moved to alternative cash sweep products, and move clients as necessary within the next 30 days; and notify affected investors of the settlement terms of the order within 30 days, according to the SEC.

Among the SEC’s other allegations were that Cantella & Co. provided no disclosure of the conflict of interest arising from the firm’s receipt of that compensation.

“At all relevant times, Cantella also failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act,” the SEC also alleged.