SEC charges advisers with breaching fiduciary duty over fund choices
Hybrid Ambassador Advisors used 12b-1 funds instead of less costly versions
The Securities and Exchange Commission has charged registered investment adviser Ambassador Advisors of Lancaster, Pa., and its principals with breaches of fiduciary duty arising out of their mutual fund share-class selection practices.
The SEC’s complaint alleges that, from August 2014 to December 2018, Ambassador and its principals — Bernard I. Bostwick, Robert E. Kauffman and Adrian E. Young — failed to adequately disclose conflicts of interest arising from their selection of mutual fund share classes that charged 12b-1 fees.
The SEC charges that the three opted for those funds instead of lower-cost share classes of the same funds. The three also were charged with breaching their duty to seek best execution by choosing those funds and for failing to adopt and implement written policies and procedures designed to prevent such violations.
The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest and civil penalties.
[More: SEC wraps up share-class initiative by settling with Merrill, two others]
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