Case shows SEC bearing down on conflicts, lack of disclosures and misleading statements (IGNITES)

A recent SEC case should be viewed as a warning from the regulator on its current mandate to investigate firms for potential misconduct with their clients. In particular, the Enforcement case reveals a focus on conflicts of interest, missing or improper disclosures and false and misleading statements. The case against Valic Financial Advisors, which sold products targeting teachers and their retirement accounts, cites serious violations in these areas, as well as the SEC’s solicitation rule, which requires firms to tell clients they receive extra compensation from third parties. Amy Lynch, FrontLine’s Founder and President, states that by including this additional rule violation, the SEC went further to emphasize how the misconduct was intentional and amounted to fraud. See IGNITES (subscription required), “SEC Fires ‘Warning Shot’ on Retirement Plan Disclosures”