A New York RIA's sanction and suspension by the SEC has had ripple effects at platform service provider Dynasty Financial Partners, which had been working with the firm for less than two years.
The SEC charged Further Lane Asset Management and its chief executive, Joseph Michael Araiz, with engaging in fraud related to a fund-of-funds under their control and other securities law violations. The firm and Araiz consented to a censure and cease-and-desist order, the SEC says, with Araiz agreeing to pay a $150,000 penalty and a one-year suspension from the industry.
Araiz did not respond to a request for comment.
The enforcement action loses Dynasty a customer -- albeit a relatively small one -- just as the firm has put a renewed focus on growth, after falling short of earlier aggressive projections.
According to Dynasty general counsel Jonathan Morris, Dynasty began to "unwind" its service agreement with Further Lane's wealth management division following the SEC actions against Further Lane in late October 2013. Dynasty "terminated" its relationship with Further Lane in March, Morris says -- around the same time that the firm, which had just over $85 million in assets at the time of its last ADV filing, also terminated its registration with the SEC. (Update: A Dynasty spokeswoman contacted Financial Planning after this story was published to say the relationship actually ended in February, before the firm terminated its registration with the SEC.)
Dynasty, an open-architecture platform outsource provider for independent advisory firms launched in 2010, has made business development a priority this year.
Ed Friedman, a top executive at rival HighTower Advisors, was brought in to boost Dynasty's recruiting numbers. In January, New York-based Dynasty hired Ronald Sallet from FiNet, Wells Fargo's independent channel, as senior vice president of network development.
Sallet was charged with expanding the network of independent advisory firms, and targeting RIAs, large-scale IBD reps and wirehouse employee advisors who are considering going independent.
So far this year, Dynasty has signed up two breakaway teams: Cable Hill Partners in Portland, Ore., and Concentus Wealth Advisors in Philadelphia have joined Dynasty's network. Dynasty expects to add at least four more advisor teams by the end of the year, according to a company spokesperson, who says the firm currently serves 20 advisory teams with approximately $19 billion in assets.
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