SEC fines WFG Advisors $100,000 for overcharging clients in alternative investments

WFG Advisors, the registered investment advisory arm of Williams Finance Group, will pay a $100,000 penalty for overcharging clients, according to the Securities and Exchange Commission. From January 2011 through August 2013 the firm overcharged clients on real estate investment trusts and business development companies, according to an SEC document dated June 28. The Dallas-based RIA, which oversees about $1.5 billion of assets, had inadequate policies and procedures to prevent and detect overcharging, the SEC said. WFG Advisors told clients in its so-called wrap account program that they'd be charged a commission to purchase interests in alternative investment products, including REITs and BDCs, but no advisory fee, according to the regulator. Yet the firm charged both, the SEC said. The wealth manager didn't have the technological capability to prevent or detect that 35 accounts were overbilled a total $34,640.63 in advisory fees, according to the document. WFG Advisors was aware that it risked overcharging clients after a compliance consultant hired in 2011 pointed out that its advisory fees may not be accurately computed or tested. The firm “relied on random account sampling conducted manually by its staff” to monitor billing accuracy, the SEC said. WFG Advisors also falsely stated in forms filed with the SEC that clients participating in the wrap program would not be charged commissions for transactions in their accounts. Wilson Williams, chairman and CEO of Williams Financial Group, and Tom Kowalczyk, who is responsible for leading WFG Advisors, didn't immediately return a phone call seeking comment about the SEC penalty.