SEC Charges Nine Investment Advisers in Ongoing Sweep into Marketing Rule Violations

Washington, D.C.--(Newsfile Corp. - September 9, 2024) - The Securities and Exchange Commission today announced settled charges against nine registered investment advisers for violating the Marketing Rule by disseminating advertisements that included untrue or unsubstantiated statements of material fact or testimonials, endorsements, or third-party ratings that lacked required disclosures. All nine firms have agreed to settle the SEC’s charges and to pay $1,240,000 in combined civil penalties.

The nine firms and their penalties are:

• Abacus Planning Group Inc. agreed to pay a civil penalty of $150,000;
• AZ Apice Capital Management LLC agreed to pay a civil penalty of $70,000;
• Beta Wealth Group, Inc. agreed to pay a civil penalty of $80,000;
• Droms Strauss Advisors Inc. agreed to pay a civil penalty of $85,000;
• Howard Bailey Securities LLC agreed to pay a civil penalty of $90,000;
• Integrated Advisors Network LLC agreed to pay a civil penalty of $325,000;
• Professional Financial Strategies Inc. agreed to pay a civil penalty of $60,000;
• Richard Bernstein Advisors LLC agreed to pay a civil penalty of $295,000; and
• TS Bank d/b/a Callahan Financial Planning agreed to pay a civil penalty of $85,000.

The SEC’s orders find that Abacus and Callahan Financial published advertisements with untrue statements about third-party ratings and that Callahan Financial posted an advertisement falsely claiming that it was a member of an organization that did not exist. The SEC’s orders find that AZ Apice, Callahan Financial, Droms Strauss, and Integrated Advisors disseminated advertisements that claimed to provide conflict-free advisory services, which the firms were not able to substantiate. According to the SEC’s order, Beta Wealth disseminated advertisements that it could not substantiate regarding an award provided to a firm principal. According to the SEC’s order, Howard Bailey disseminated advertisements claiming to contain two testimonials, but neither actually came from current clients. It also advertised endorsements that did not disclose that the endorser was a paid, non-client of Howard Bailey in videos, on social media, and on physical objects such as bags and flags. Finally, as set forth in the orders, Abacus, Beta Wealth, Professional Financial, and Richard Bernstein Advisors included in their advertisements third-party ratings, some of which were more than five years old, without disclosing the dates on which the ratings were given or the periods of time upon which the ratings were based.

“The Marketing Rule’s provisions regarding truthfulness, substantiation, and disclosure are critical to protecting investors. The advertisements at issue in each of these actions violated the Marketing Rule and posed a serious risk of misleading investors,” said Corey Schuster, Co-Chief of the SEC Division of Enforcement’s Asset Management Unit.  “Investment advisers must comply with all aspects of the Marketing Rule, and we will continue to hold them accountable when they fail to do so.”

Without admitting or denying the SEC’s findings, all of the firms consented to the entry of orders finding that they violated the Investment Advisers Act of 1940 and ordering them to be censured, cease and desist from violating the charged provisions, comply with certain undertakings, and pay the civil penalties referenced above.

The SEC’s ongoing investigation of potential Marketing Rule violations is being conducted by Marilyn Ampolsk, Jonathan Menitove, Donna Norman, and Emily Shea and supervised by Colin Forbes, Brianna Ripa, Andrew Dean, and Mr. Schuster, all of the Asset Management Unit.  The team was assisted by Alex Lefferts of the Division of Enforcement’s Office of Investigative and Market Analytics and Janet Grossnickle, Julia Gilmer, Jennifer Paul, Jennifer Sawin, Austin Chen, and David Marcinkus of the SEC’s Division of Investment Management.