SEC fines RIA $230,000 over conflicts

The Securities and Exchange Commission has obtained final judgments against Stamford, Conn.,-based Momentum Investment Partners and its CEO, Ronald J. Fernandes, for failing to disclose to some advisory clients certain fees they were being charged. The judgments against the firm, which did business as Avatar Investment Management, order the defendants to pay a total of over $230,000, the SEC said in a release. The firm is now defunct. Last year, the SEC filed a complaint alleging that Avatar and Mr. Fernandes failed to disclose material conflicts of interest in connection with investments Avatar made in four new mutual funds that it created and managed. The complaint alleged that Avatar and Mr. Fernandes failed to disclose that moving $11 million of clients' assets into the mutual funds would increase the clients' total advisory fees paid to Avatar without changing the clients' investment strategy. The SEC charges that between May 2013 and March 2014, Avatar's clients paid almost $111,000 in additional fees, including $61,275.52 that was ultimately paid to Avatar, for no additional services. The final judgments order Avatar to disgorge that sum, plus $7,400.85 in prejudgment interest, as well as pay a civil penalty of $125,000. The judgments order Mr. Fernandes to pay a civil penalty of $40,000. The defendants neither admit nor deny the allegations in the complaint, the SEC said.