SEC orders $10 billion RIA, founder to pay $2.1 million over profit-sharing conflicts

Foundations Investment Advisors, a Phoenix-based RIA with $10 billion in assets under management, and its former CEO and founder Bryon E. Rice, have been fined more than $2 million in combined penalties by the Securities and Exchange Commission for failing to disclose Rice’s trading activity and profits he shared with a sub-advisor that provided investment model portfolios to Foundations’ clients.

The SEC's administrative order, issued June 8, found that Foundations and Rice breached their fiduciary duties across a six-year period stretching from 2019 through 2025, during which the RIA failed to disclose three separate conflicts of interest to its approximately 25,000 clients. Foundations has a network of approximately 200 affiliated investment advisor representatives and now lists Kyle Mann as its CEO and CFO.

At the center of the case is a profit-sharing arrangement Rice entered in September 2020, when an entity he wholly owned spent $100,000 to acquire a 4.99% profit interest in the holding company of a third-party asset manager that provided model portfolios to Foundations' clients. Rice's investment committee at Foundations, which he sat on, continued directing client assets into that manager's products throughout the arrangement. As of December 31, 2020, approximately 66% of Foundations' client assets were invested in the manager's exchange-traded funds.

Foundations did not disclose Rice's ownership interest until its Form ADV update in March 2021 — more than five months after the arrangement was entered into. Rice received two payments totaling $434,162 from the profit-sharing arrangement before terminating it in 2023. 

Rice was CEO of Foundations from April 2016 to him stepping down in October 2025, and sat on its investment committee during all relevant periods. Rice maintains an 88% ownership interest in Foundations, which reported $10.1 billion in AUM in its latest Form ADV filed on March 27, 2026.

The SEC also found that Foundations entered into an ETF launch and expense agreement with a separate fund manager in August 2021, under which Foundations was financially liable for certain fund expenses if assets didn't grow enough to cover them. That agreement gave Foundations a financial incentive to recommend those ETFs to clients — yet the firm's Form ADV during the same period stated it had "no material financial interest in any securities being recommended," which the SEC found to be inaccurate.

After the ETF in question began trading in March 2022, Rice personally bought it on 87 separate days through 279 trades in his personal brokerage account, while serving as CEO of Foundations and sitting on its investment committee that had directed client assets into the same ETF. On 33 occasions, Rice's purchase was the last trade of the day and matched the closing price. 

By June 2022, Foundations' clients held approximately 80% of the ETF's outstanding float. The SEC found Rice did not financially benefit from the trading, but concluded both he and the firm negligently breached their fiduciary duties.

“Contemporaneous text messages sent by Rice to CIO, who was also the CEO of the adviser to the ETF during this time period, show that Rice acknowledged that his end-of-day trading in the ETF was due to his concern about the bid-ask spread and performance of the ETF in client portfolios,” the SEC wrote in its ruling.

Under the settlement, Foundations was fined $1.2 million and ordered to pay $152,628 in disgorgement plus interest. Rice was ordered to pay $434,162 in disgorgement, $5,395 in prejudgment interest, and a $354,675 civil penalty. Neither admitted nor denied the SEC’s findings, and Rice is not registered with the SEC.

The latest SEC action is not the only legal matter that has involved Rice. A racial discrimination and wrongful termination lawsuit filed by former employee Michael Ruiz of Magellan Financial—the financial marketing organization Rice previously ran before founding Foundations—alleged Rice repeatedly made racially derogatory remarks about his Mexican heritage and that those remarks contributed to his demotion and termination. Ruiz’s lawsuit went to trial in May 2026, with an Arizona federal jury ultimately clearing Magellan of the allegations after a seven-day proceeding.