The Securities and Exchange Commission said Thursday that it has reached a final judgment by consent against Cambridge Investment Research Advisors Inc. of Fairfield, Iowa.
In March 2022, the SEC charged Cambridge with failing to disclose material conflicts of interest and breaching its duty of care related to its selection of mutual funds and wrap accounts for clients.
According to the SEC's complaint, filed in the U.S. District Court for the Southern District of Iowa, since at least 2014, Cambridge invested client assets in mutual funds and money market sweep funds that generated millions of dollars in revenue sharing payments to an affiliated broker-dealer, Cambridge Investment Research Inc., instead of lower-cost share classes and investment options that would have yielded less or no revenue sharing.
These undisclosed investment practices, the complaint alleged, also allowed Cambridge to avoid paying millions of dollars in transaction fees.
The SEC said Thursday that Cambridge consented to entry of the final judgment, without admitting or denying the allegations in the complaint, permanently enjoining it from violating Sections 206(2) and 206(4) of the Investment Advisers Act of 1940.
The final judgment further orders Cambridge to pay $15 million in monetary relief, consisting of $10 million in disgorgement, $3 million in prejudgment interest, and a $1.8 million civil penalty, and to administer the distribution of such amounts to harmed clients.
In connection with the final judgment, the SEC said that it dismissed its relief defendant claim against Cambridge Investment Research Inc.
Cambridge told ThinkAdvisor on Thursday that it does not comment on litigation.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.