www.advisorhub.com
Open in
urlscan Pro
172.67.68.158
Public Scan
Submitted URL: https://send.advisorhub.com/l/aPRwEFRgHz9PoxjRfvQuac9eYyfgBGNXC4P6_oY8y58
Effective URL: https://www.advisorhub.com/first-republic-to-pay-1-8m-to-settle-sec-charges-over-revenue-sharing-violations/?utm_source=Pin...
Submission: On May 24 via api from CH — Scanned from DE
Effective URL: https://www.advisorhub.com/first-republic-to-pay-1-8m-to-settle-sec-charges-over-revenue-sharing-violations/?utm_source=Pin...
Submission: On May 24 via api from CH — Scanned from DE
Form analysis 2 forms found in the DOM
GET https://www.advisorhub.com/
<form role="search" method="get" class="searchform form-inline" action="https://www.advisorhub.com/">
<div class="form-group">
<label class="sr-only screen-reader-text" for="s">Search for:</label>
<i class="fa fa-search search-icon" aria-hidden="true"></i>
<input class="form-control default" type="text" name="s" id="s" value="Search Keywords" onclick="if(this.value == 'Search Keywords'){this.value=''}" onblur="if(this.value == ''){this.value='Search Keywords'}">
<span class="input-group-btn">
<button class="btn searchGo" type="submit">
<i class="fa fa-arrow-right" aria-hidden="true"></i>
<span class="sr-only"> Search </span>
</button>
</span>
</div>
</form><form id="commentform" class="comment-form">
<iframe title="Comment Form"
src="https://jetpack.wordpress.com/jetpack-comment/?blogid=165023220&postid=153261&comment_registration=0&require_name_email=1&stc_enabled=1&stb_enabled=1&show_avatars=0&avatar_default=mystery&greeting=Leave+a+Reply&greeting_reply=Leave+a+Reply+to+%25s&color_scheme=light&lang=en_US&jetpack_version=10.7&show_cookie_consent=10&has_cookie_consent=0&token_key=%3Bnormal%3B&sig=1f0b4fd1eacabfec4397b1f76da630313d7147c1#parent=https%3A%2F%2Fwww.advisorhub.com%2Ffirst-republic-to-pay-1-8m-to-settle-sec-charges-over-revenue-sharing-violations%2F%3Futm_source%3DPANTHEON_STRIPPED%26utm_medium%3DPANTHEON_STRIPPED%26utm_campaign%3DPANTHEON_STRIPPED"
name="jetpack_remote_comment" style="width: 100%; height: 60px; border: 0px;" class="jetpack_remote_comment" id="jetpack_remote_comment" sandbox="allow-same-origin allow-top-navigation allow-scripts allow-forms allow-popups" scrolling="no">
</iframe>
<!--[if !IE]><!-->
<script>
document.addEventListener('DOMContentLoaded', function() {
var commentForms = document.getElementsByClassName('jetpack_remote_comment');
for (var i = 0; i < commentForms.length; i++) {
commentForms[i].allowTransparency = false;
commentForms[i].scrolling = 'no';
}
});
</script>
<!--<![endif]-->
</form>Text Content
Skip to Main Content
SUBMIT A TIP RECEIVE DAILY NEWS ACCOUNT
Menu
* News
* * Latest News
* * Jamie Dimon Hypes J.P. Morgan’s Traditional Brokers
* * Wells Fargo to Pay Nearly $1M to Ex-Credit Suisse Broker in Deferred
Comp Row
* * JPMorgan Plans to Hire 1,300 More Advisors Over Next Three Years
* * Finra Advances Revised Proposal to Reform Broker Expungement Process
* Close
* Advisor Moves
* * Rockefeller Opens Seattle Office with $5.2-Mln Morgan Stanley Team
* * First Republic and UBS Pluck Managers from J.P. Morgan Advisors on
Both Coasts
* * Rockefeller Swipes $17-Mln Morgan Stanley Broker Out from Under First
Republic
* * Two UBS Teams with $16.5 Million in Combined Revenue Break Away in
NYC
* Close
* Enforcement
* * First Republic to Pay $1.8M to Settle SEC Charges over Revenue
Sharing Violations
* * Wells Fargo Advisors to Pay $7 Million Over Anti-Money Laundering
Lapses: SEC
* * Firms Fire High Risk Brokers as Finra Takes Aim at Rogue Actors
* * Finra Suspends Ex-Morgan Stanley Broker Who Hyped ‘Exclusive’ Venture
Capital Investment
* Close
* Markets
* `Nothing Safer Than Cash’: Tech Rout Puts Silicon Valley on Edge
* ‘Any News Is Bad News’ as Earnings Fail to Save Equity Bulls
* ‘50 Cent’ Profited From Volatility Jump, Wells Fargo Says
* ‘Beaten Down’ ETF Is a Way to Play Inverted Curve, BofA Says
* Close
* Opinion
* * SIRIANNI: Morgan Stanley’s Moment
* * Sirianni’s 2022 Predictions: The Year of The Great Entrepreneur
Revival
* * Why Only a Huge Shock Will Deter Risk-Taking Investors
* * Sirianni: Toxic Culture
* Close
* Fintech News
* * UBS “Committed” to Finishing Broker Workstation Revamp Despite
Delays, CFO Says
* * Wells Fargo Advisors Rolls Out eMoney Planning Tool for Brokers
* * Fintech Firm Apex Clearing Agrees to Go Public Via SPAC
* * Merrill Systems Hiccuped on Thursday as Stocks Slid
* Close
* From the Publisher
* * SIRIANNI: Morgan Stanley’s Moment
* Sirianni’s 2022 Predictions: The Year of The Great Entrepreneur
Revival
* * Tony Sirianni Interviews Ken Cella — Principal, Client Strategies
Group at Edward Jones
* Sirianni: Death of the Trainee
* * Welcome to AdvisorHub RIA
* From the Publisher: Sirianni’s Predictions for 2021
* * Seven Questions with Tony Sirianni: Josh Rogers, Founder and CEO,
Arete Wealth
* Seven Questions with Tony Sirianni: Phil Hildebrandt, Principal, CEO
of Segall Bryant & Hamill
* Close
* Close
* Deals & Comp
* Recruiting Wire
* Breakaway Center
* Resources
* * Resources Home
* Boutique
* * Fintech Product Directory
* Fintech Resources
* * Institute
* Practice Management Resources
* * Transition Resources
* * Events
* * Culture Survey
* Close
* AH TV
* Podcasts
* AH Magazine
* RIA Center
* Asset Manager Hub
close X
Search for: Search
May 20, 2022
FIRST REPUBLIC TO PAY $1.8M TO SETTLE SEC CHARGES OVER REVENUE SHARING
VIOLATIONS
by Jake Martin
|
Enforcement, News
|
First Republic, SEC
|
RIA
|
View Comments
Share This
SUBMIT A TIP
Sundry Photography - stock.adobe.com
First Republic Bank’s registered investment advisory arm agreed to a censure and
will pay more than $1.8 million to settle with the Securities and Exchange
Commission, which alleged that it failed to disclose a conflict in placing
customers in certain mutual fund share classes and cash sweep accounts.
The SEC alleged that First Republic Investment Management violated its fiduciary
duty by not informing clients about a revenue sharing agreement that it had made
with an unaffiliated clearing firm that dated back to 2014, according to an
administrative proceeding order filed Thursday. The firm had self-reported the
violations under the SEC’s Share Class Selection Disclosure Initiative targeting
advisory firms that recommended high-fee mutual funds, according to the order.
The issue in First Republic’s case was tied to a no-transaction fee mutual fund
program that was offered by the clearing firm, which was not identified in the
order. The funds tended to have higher expense ratios and higher fees than other
share classes offered by the clearing firm, the SEC said.
“The payments the affiliated broker received under the agreement created a
financial incentive for [First Republic] to recommend mutual funds covered by
the agreement over other investments, including lower-cost share classes of the
same mutual fund, when rendering investment advice to its clients,” the SEC’s
lawyers wrote in the order.
The revenue sharing payments were kept by the San Francisco-based bank and not
distributed to First Republic’s advisors, according to the regulator.
The SEC also found deficiencies with First Republic’s cash sweep accounts, which
the Commission said could be costlier for clients depending on the fund and
share class. The RIA’s clearing broker similarly agreed to share revenue with
the firm’s affiliated broker, although profits were not shared with the
advisors, according to the SEC.
A spokesman for First Republic, which did not admit nor deny the SEC’s findings,
declined to comment. The bank’s RIA subsidiary oversaw nearly $137 billion in
client assets as of the end of 2021, according to its Form ADV.
First Republic reviewed and corrected relevant disclosure documents in 2018 and
2019 and moved clients out of certain share classes and sweep accounts where
necessary, the regulator noted in the order. The bank agreed to pay $1,332,664
in disgorgement plus $243,289 in prejudgment interest, as well as a civil
penalty of $250,000, according to the order.
The SEC in March 2019 said it had collected $125 million in disgorgement from 79
firms as part of its share class selection disclosure initiative but would
continue to evaluate self-reports that it had received from firms. It has
extracted additional settlements from firms that failed to disclose incentives
to recommend funds that paid them distribution fees when less expensive share
classes were available.
AS ADVISORY ACCOUNTS SOAR, EDWARD JONES’ DEPENDENCE ON AMERICAN FUNDS SHRINKS
Sales of Capital Group’s American Funds accounted for 11% of Jones’ revenue in
the second quarter, down nearly half from 20% five years ago.
Aug 13, 2021
In "News"
FINRA, SEC OFFICIALS OUTLINE PITFALLS FOR FIRMS IN REG BI EXAMS
Some firms previously cited for failing to comply with the defunct suitability
rule are failing to comply with its successor Reg BI, a senior Finra official
said Tuesday.
May 18, 2022
In "Most Read"
FIRST REPUBLIC SIGNS $17-MILLION MEGA PRODUCER FROM MORGAN STANLEY IN CALIFORNIA
Los Gatos-based Cheryl Young, who was ranked as the top broker in the state this
year, likely earned a multi-year bonus that could have reached as high as $60
million, according to recruiters.
Apr 19, 2022
In "Advisor Moves"
LIKE THIS ARTICLE? LET ADVISORHUB COME TO YOU! SIGN UP
Share This
Comments (1)
* on May 24 2022, sayitaintso says:
Play stupid games, win stupid prizes.
> Reply to sayitaintso
LEAVE A REPLY CANCEL REPLY
* About Us
* Contact Us
* Advertise
* Events
* Careers
GET OUR NEWSLETTER
Industry focused content and breaking news.
SIGN UP
CONTACT US
EMAIL US
1707 Post Oak Blvd.
#484
Houston, TX 77056
© 2022 AdvisorHub
* |Terms of Use
* |Privacy Policy
* |Advertise
* |Careers
* Facebook
* Linkedin
* Twitter
Back to top