SEC fines RIA $230,000 over conflicts

Agency says firm and its CEO failed to disclose fees.
MAY 30, 2017

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.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.