The Securities and Exchange Commission penalized Sigma Planning Corp. for investing clients' money in certain mutual funds without disclosing conflicts of interest.
The regulator said the company did not fully disclose that it received a portion of 12b-1 fees from certain mutual funds when lower cost share classes for the same mutual fund were available to its clients. The SEC also said the company did not disclose that its broker/dealer affiliates received revenue-sharing payments from certain investment products purchased for the company's advisory clients.
The SEC's order also found that Sigma itself acted as an unregistered broker/dealer.
Sigma Planning did not agree nor deny the SEC's findings. It will pay disgorgement of $1.9 million, prejudgment interest of $225,909 and a civil penalty of $400,000. It also agreed to distribute the earned fees to affected investors.
