Momentum Investment Partners fraudulently failed to disclose higher fees, SEC says

Momentum Investment Partners fraudulently failed to disclose higher fees, SEC says
The firm, which did business as Avatar, moved clients into newly created, higher-priced mutual funds without disclosing it.
MAY 19, 2016
The Securities and Exchange Commission has charged advisory firm Momentum Investment Partners in Stamford, Conn. and one of its principals with fraud for failing to disclose additional fees charged to clients. The firm, which did business as Avatar Investment Management, and principal Ronald Fernandes moved some clients into newly created mutual funds in 2013 without notifying them of the transfer and higher cost, the SEC said in a litigation announcement Tuesday. Avatar's clients paid almost $111, 000 in additional fees from May 2013 to March 2014 for no additional advisory services, according to a complaint the agency filed the same day in federal court in Connecticut. The firm had been investing their money directly into various exchange-traded funds and the new mutual funds were designed to mirror that same strategy. “The Avatar individual advisory client assets proved to be the seed capital for the Avatar mutual funds, but Avatar was not successful in raising additional assets,” the agency said in the announcement. “The funds eventually folded.” Mr. Fernandes had moved about $11 million from about 20 accounts into four new mutual funds created and managed by Avatar, allowing the firm to collect the additional layer of fees, according to the complaint. Avatar is now defunct, the SEC said. Efforts to reach Mr. Fernandes for comment weren't immediately successful.

Latest News

UBS client says his wife moved in with their wealth advisor. It got messy
UBS client says his wife moved in with their wealth advisor. It got messy

Advisor accused of scheming to move family trust to firm, lawsuit seeks $10 million in damages.

Gen Zs are grappling with financial challenges in extraordinary times
Gen Zs are grappling with financial challenges in extraordinary times

Young Americans are inexperienced in navigating current stormy waters.

Musk needs to exit role at 'neglected' Tesla, says $3.3B investment firm CEO
Musk needs to exit role at 'neglected' Tesla, says $3.3B investment firm CEO

Early investor in EV firm says it is in crisis and needs a change of leadership.

Nvidia unveils superchips, addresses spiraling cost concerns
Nvidia unveils superchips, addresses spiraling cost concerns

Chipmaker's developer conference comes at a pivotal moment.

Citi slashes 'transformation' bonuses for senior execs
Citi slashes 'transformation' bonuses for senior execs

Three-year program aimed to boost regulatory compliance, culture change.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies