SEC orders firms to pay $3.4M in penalties over reporting failures

It's another week, and another enforcement sweep for the SEC as it charges nearly a dozen large firms over what it said were failures to fulfill an important reporting obligation.

On Tuesday, the SEC announced it has charged 11 institutional investment managers for failing to file required reports disclosing securities holdings.

In its statement announcing the charges, the regulator said the firms were supposed to submit Forms 13F, which are mandated for investment managers with discretionary control over more than $100 million in certain securities.

Form 13F filings became a point of focus for the SEC in the aftermath of Archegos Capital Management's 2021 implosion, which occurred as a result of its stealthily putting together swap positions that reverberated into billions of dollars in losses for Credit Suisse and other firms.

Two of the firms, Nationale-Nederlanden Powszechne Towarzystwo Emerytalne and NEPC, also failed to submit Forms 13H, which are necessary for large traders with significant activity in exchange-listed securities.

All 11 firms reached settlements with the SEC, with nine agreeing to pay a combined total of over $3.4 million in civil penalties. Those include:

• NEPC – $725,000
• Mason Investment Advisory Services – $525,000
• Focus Financial Network – $475,000
• TD Private Client Wealth – $475,000
• Ashton Thomas Private Wealth – $375,000
• Azzad Asset Management – $225,000
• Financial Synergies Wealth Advisors – $225,000
• Traphagen Investment Advisors – $225,000
• Bulltick Wealth Management – $175,000

Two firms—Dixon Mitchell Investment Counsel and Nationale-Nederlanden—were not subjected to penalties, as they self-reported their violations and cooperated fully with the SEC. Similarly, NEPC, while penalized for its failure to file Form 13F, avoided further penalties for Form 13H violations due to its self-reporting and cooperation.

“The integrity of the securities markets depends largely on firms providing accurate, timely information about their securities holdings and trading activity,” said Jason Burt, director of the SEC’s Denver office.

"These resolutions illustrate how seriously the Commission takes non-compliance as well as the benefits a firm may derive from self-reporting its non-compliance,” Burt said.

The SEC's action comes on the heels of its marketing rule crackdown last week, where the regulator hit nine investment advisor firms with a collective $1.24 million in penalties for rule violations it found in their advertisements.