BB&T Securities reaches $5.7 million settlement with SEC for deceiving clients
A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011. The database is emerging alongside a new program by the FBI's criminal profiling group in Quantico, Virginia, that is creating a series of behavioral composites to help agents investigate white collar crime. The more systematic approach by the SEC and FBI comes in response to the growth and complexity of financial crimes in recent years. Picture taken June 24, 2011. To match Special Report SEC/INVESTIGATIONS REUTERS/Jonathan Ernst (UNITED STATES - Tags: CRIME LAW POLITICS BUSINESS)
The SEC claimed BB&T misled clients and caused them to overpay for advisory services.
BB&T Securities, a wholly owned brokerage subsidiary of BB&T Corp., has reached a $5.7 million settlement with the Securities and Exchange Commission over allegations that it misled clients and caused them to overpay for advisory services.
BB&T agreed to pay $4.7 million in disgorgement to retail investors, $497,000 in interest and a $500,000 penalty to settle charges levied by the SEC. BB&T neither admitted nor denied the claims.
The settlement, announced Tuesday, concerns alleged breaches at Valley Forge Asset Management, a $2.8 billion advisory firm BB&T Securities acquired in 2014, as part of the Susquehanna Bank acquisition. It was merged into BB&T Securities in March 2016.
The SEC alleged that Valley Forge swayed clients to select its in-house, full-service brokerage services over less expensive outside options by deceiving them into thinking, via misleading statements and inadequate disclosures, that they were promising a high level of service at a low cost.
Valley Forge, the SEC said, charged commissions averaging 4.5 times more than what clients would have paid at other brokerage firms, and “obscured” the price difference by stating it was giving clients a 70% discount off its retail commission rate.
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“Valley Forge put its own interests ahead of its advisory clients, causing them to spend more money unnecessarily by portraying inaccurate costs and benefits of using its in-house brokerage,” said Kelly Gibson, associate director of enforcement in the SEC’s Philadelphia regional office.
BB&T Securities has since amended Valley Forge’s cost structure and disclosures, the SEC said.
“BB&T Securities is pleased to have been able to resolve this legacy matter,” said BB&T spokesman David White. “At BB&T, the best interest of our clients has always been, and continues to be, our number one priority.”
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