One of the nation's largest independent broker-dealers says it has reimbursed more than 2,300 accounts in a settlement with the SEC after being charged by the regulator with improperly calculating advisory fees and overcharging clients.
The SEC announced Thursday that Transamerica Financial Advisors failed to process every aggregation request from clients who had increased assets in certain investment programs so they could receive breakpoint discounts on fees that were being offered.
Transamerica, which is affiliated with Dutch insurer Aegon, also had conflicting policies on whether its advisors were required to communicate to clients the savings they were receiving from the discounts, which were made available through its TFA Advantage Account Program, TFA Capital Account Program and TFA Sterling Advisory Account Program, according to the SEC.
As a result, the company overcharged certain clients by failing to apply discounts and not setting adequate policies to ensure fees were being properly calculated, the SEC says.
2,304 CLIENTS REIMBURSED
As part of its deal with the SEC, Transamerica has reimbursed 2,304 current and former client accounts with credits totaling $553,624 including interest. The company has also agreed to pay an additional $553,624 penalty.
"The company has taken action to ensure the accounts of clients in the Capital, Sterling, or Advantage Programs have been properly linked for purposes of obtaining advisory fee discounts," the company said in a statement. "The failure to link accounts was unintentional. Current and former clients in these programs who were entitled to these discounts for the affected period have now received the discounts."
The case highlighted a discrepancy between the company's disclosures and its actual practices, said an SEC official. "The securities laws require investment advisors to charge advisory fees consistent with their own disclosures and stated policies so investors get what they bargained for, Eric Bustillo, director of the SECs Miami Regional Office, said in a statement. Transamerica failed to take appropriate remedial steps even after SEC examiners had flagged the problem.
Transamerica has more than $19 billion in customer assets with more than 5,000 registered representatives, according to the firm's website. It ranked 27th in the 2013 FP50 ranking of top independent broker-dealers with $232.6 million in total revenue, a 49.7% increase from the previous year's figures.
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