The SEC, which increasingly is examining the securities trading practices of money managers, has sued an investment adviser for allegedly failing to get the best execution of trades for its clients.
Shawmut Investment Advisers of Boston allegedly paid higher-than-necessary fees to a Michigan broker-dealer for referring money management clients to Shawmut, according to an SEC lawsuit filed Sept. 9. Traders for Shawmut, which was acquired in 1995 by Fleet Investment Advisors of Boston, sent trades to an unidentified broker/dealer who was charging comparatively high rates to buy and sell fixed-income securities for Shawmut clients, according to the SEC. That broker/dealer then paid 80 percent of the fees it earned on the Shawmut transactions to East West Institutional Services of Harper Woods, Mich., a broker/dealer that had agreed to refer clients to Shawmut, the SEC alleged. The failure to obtain best execution of trades cost Shawmut customers approximately $63,000, according to the SEC.