2025 Fiscal Year in Review: SEC Enforcement Against Investment Advisers to Private Funds, Registered Funds, and Retail Clients

In its 2025 fiscal year that ended on September 30, 2025, the U.S. Securities and Exchange Commission (SEC or Commission) continued to pursue enforcement actions against investment advisers and their representatives, bringing over 90 actions. These numbers were substantially down from the prior fiscal year, where the SEC brought over 130 actions against investment advisers and their representatives. Some of the reduction is an expected result of the transitions associated with an administration change, and the numbers this year are not dissimilar from the first year of the last Trump administration. Some of the reduction, however, is likely due to other more significant changes at the SEC unique to this administration, including the loss of approximately 15% of Enforcement staff following the administration change. Still, enforcement actions against investment advisers were among the more prevalent categories of enforcement activity this fiscal year (compared, e.g., to cases against issuer for reporting issues).

With respect to subject matters, the SEC under the current administration has announced that it will continue to bring cases involving fraud (which we largely do not cover here). Chair Paul Atkins has indicated that the Commission “must go after cases of genuine harm and bad acts, but [it] must view cases of benign or innocent actions differently. In the past, we have seen examples of enforcement actions in areas, such as retention of books and records, that consumed excessive Commission resources not commensurate with any measure of investor harm.”¹ Our Year in Review reveals a more complex picture as it relates to topics. While the SEC under the current administration does not appear to be actively pursuing certain categories of cases involving technical violations (e.g., off-channel communications, standalone compliance rule failure cases) it has continued to bring cases in most other major program areas, including the Marketing Rule, conflicts of interest disclosures, custody rule violations, short selling violations, fees and expenses (private fund advisers), revenue sharing, cherry-picking, misrepresentations, and cases involving chief compliance officer (CCO) liability.

Here, we provide a brief overview of key areas of focus and notable actions addressing the following topics:

I. Specific rule enforcement, including

a. marketing rule

b. recordkeeping (off-channel communications)

c. whistleblower protection rules

d. custody rule

e. Rule 105 of Regulation M

II. Conflicts of interest — related practices and disclosures, including

a. undisclosed compensation and account/program recommendations

b. fees and expenses for private fund advisers

c. revenue sharing

d. cherry-picking

III. Misrepresentations, omissions, and inadequate disclosures

IV. Hedge clauses

V. Artificial intelligence

VI. Anti-money-laundering

VII. Litigated actions

VIII. CCO liability

IX. Miscellaneous compliance failures

This Year in Review covers enforcement actions from the entirety of the fiscal year, both pre- and post-administration change. We therefore indicate the date on which the action was filed. For reference, actions brought from October 1, 2024, to January 17, 2025, were under the prior administration. Actions brought from January 20, 2025, to April 18, 2025, were under the current administration with Mark Uyeda serving as Acting Chairman. Actions brought from April 21, 2025, to September 30, 2025 were under the current administration with Paul Atkins serving as Chairman.

Rule Enforcement

Marketing Rule

The SEC continues to bring enforcement actions for Marketing Rule violations, including under its previous and new leadership, signaling the agency’s continued focus on Marketing Rule compliance. The SEC brought a series of settled enforcement actions on similar theories as the below matters in FY 2024, showing that this is a perennial area of focus of the SEC.

• In a settled administrative in November 2024, the SEC charged an adviser with Marketing Rule violations for disseminating advertisements containing paid endorsements from professional athletes that lacked required disclosures and by advertising hypothetical performance to the general public on its website without adopting and implementing required policies and procedures.² The adviser agreed to pay a $250,000 civil penalty and comply with undertakings, including reviewing and revising its advertisements. (November 1, 2024)
  
  
• In December 2024, the SEC charged an investment adviser to retail clients with violating the Marketing Rule by making false and misleading claims about its investment strategies and their performance, failing to present net performance information alongside gross performance, being unable to substantiate performance claims, and advertising hypothetical performance on its public website without adopting and implementing required policies and procedures.³ The SEC also found that the adviser failed to maintain books and records sufficient to demonstrate the calculation of the performance information in its advertisements, along with other compliance failures. To settle the charges, the adviser agreed to pay a $175,000 civil money penalty and comply with certain undertakings, with the SEC’s order citing the adviser’s remedial acts and cooperation. (December 20, 2024)
  
  
• Most recently, in September 2025, the SEC brought settled charges against a registered investment adviser for violating the Marketing Rule by disseminating an advertisement in which the adviser claimed it “refuse[d] all conflicts of interest,” without providing any context for the claim, while recognizing and disclosing conflicts elsewhere.⁴ The SEC’s order also included findings related to recordkeeping of advertisements on its public website, policy and procedure failures, and failure to conduct an annual compliance review. The settlement included a $75,000 civil penalty and an undertaking to conduct an annual compliance review and certify in writing to its completion. (September 4, 2025)

Recordkeeping

Under the prior administration, the SEC charged numerous investment advisers and other registrants for recordkeeping failures, including related to “off-channel” communications, that is, employees’ use of unapproved applications on personal devices to engage in communications relating to the firms’ business. On January 13, 2025, prior to the administration change, the SEC charged nine investment advisers and three broker-dealers for failures to maintain and preserve such off-channel communications on personal devices.⁵ The adviser entities were ordered to pay $58.5 million of $63.1 million in combined penalties (with the broker-dealer entities paying a smaller portion), with individual penalties of up to $12 million. The SEC departed from its standard settlement terms in these cases and did not order independent compliance consultants or other undertakings, instead including lesser “above-the-line” undertakings that do not trigger the same adverse collateral consequences as traditional undertakings.⁶

The SEC has not brought any off-channel communications cases under a similar theory since the leadership change at the SEC, and the SEC staff have closed pending investigations on this issue. The SEC staff continue, however, to request production of off-channel communications in investigations of other substantive issues, and if the staff find the use of off-channel communications to avoid supervisory or regulatory oversight, we expect the SEC to pursue those issues.

Whistleblower Protection Rules

During the prior administration, the SEC charged numerous advisers, finding violations of whistleblower protections afforded under Exchange Act Rule 21F-17. The SEC brought one such case in the past fiscal year.

On January 16, 2025, the SEC charged two affiliated private fund advisers with violating the whistleblower protection rule by requiring departing individuals in separation agreements to state as fact that they had not filed a complaint with any governmental agency.⁷ The SEC found that the agreements could, in effect, impede communications with the SEC by identifying whistleblowers and prohibiting whistleblowers from receiving postseparation payments and benefits. The SEC charged the advisers with other violations related to vulnerabilities in their investment models, and the DOJ subsequently criminally charged the former employee responsible for the investment model conduct. To settle the multiple charges (including the Rule 21F-17 charge), the advisers agreed to a penalty of $45 million each, totaling $90 million. The SEC’s order cited the advisers’ cooperation and remediation and required the advisers to continue to cooperate fully with the Commission.

Custody Rule

During the 2025 fiscal year, the SEC has continued to bring actions against investment advisers pre- and postadministration change, alleging failures to comply with requirements related to safekeeping client assets in violation of the custody rule. The SEC has brought similar cases administration-over-administration, showing that the custody rule is a perennial issue for the SEC.

• In December 2024, the SEC charged an investment adviser with violating the custody rule by failing to timely distribute audited financial statements prepared in accordance with generally accepted accounting principles (GAAP) to investors in pooled investment vehicles it advised for two fiscal years.⁸ Without admitting or denying the allegations, the adviser agreed to pay a $115,000 penalty to settle the charges. (December 20, 2024)
  
  
• In August 2025, the SEC charged an adviser with failing to comply with the independent verification requirement for client funds and securities over which it had custody by failing to arrange for the required surprise examinations for the client accounts throughout a six-year period.⁹ Without admitting or denying the findings, the adviser agreed to pay a $50,000 penalty. (August 1, 2025)

Rule 105 of Regulation M

On August 4, 2025, after the administration change, the SEC charged a private fund adviser with violating Rule 105 of Regulation M, which prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing the same security in the offering, absent an exception.¹⁰ The SEC’s order found that the adviser violated Rule 105 by purchasing an equity security for the accounts of six of its private fund clients in a covered offering after the adviser had sold short the same security on behalf of those clients during Rule 105’s restricted period without an applicable exception. To settle the charges, the adviser agreed to pay a $250,000 civil penalty. Trade associations are pursuing regulatory changes to the “strict liability” nature of Rule 105 violations as part of broader regulatory reforms.

Conflicts of Interest

Undisclosed Compensation and Account/Program Recommendations

The SEC continues to bring enforcement actions against advisers concerning conflicts of interest arising from fees, expenses, other undisclosed or insufficiently disclosed compensation, account- and program-type recommendations, and for the misleading use of “may” in conflict disclosures. These cases span the administrations.

• In October 2024, the SEC charged a dually registered broker-dealer and investment adviser with failing to fully and fairly disclose the financial incentive it and some of its financial advisors had when recommending the firm’s portfolio management program, a discretionary wrap fee program, over third-party-managed advisory programs, in addition to related policies and procedures violations.¹¹ To settle the charges, the firm agreed to pay a $45 million civil penalty. (October 31, 2024)
  
  
• In January 2025, the SEC charged an investment adviser with breaching its fiduciary duty to certain of its advisory clients by failing to disclose conflicts of interest created by paying incentive compensation to its representatives in connection with the rollover of retirement assets into the firm’s advisory accounts, along with related policies and procedures violations.¹² The SEC’s order found that the firm made limited conflicts disclosure regarding incentives it “may” provide to its representatives, whereas the firm was actually paying incentive compensation. In the settled order, the SEC noted the adviser’s remedial efforts and cooperation, with the adviser agreeing to pay a $2.9 million civil monetary penalty to settle the charges. (January 17, 2025)
  
  
• In February 2025, the SEC charged an investment adviser and its registered representative for converting retail brokerage accounts to advisory accounts without adequately disclosing significantly higher fees and increased costs to clients as well as increased compensation for the representative.¹³ The order also found that the respondents failed to adequately consider whether it was in their clients’ best interests to convert their brokerage accounts to advisory accounts, along with related compliance deficiencies. To settle the charges, the firm agreed to pay a $150,000 and retain an independent compliance consultant; the representative agreed to a $75,000 civil penalty and a nine-month industry suspension. The SEC’s order noted remedial acts undertaken by the respondents. (February 14, 2025)
  
  
• In August 2025, the SEC charged an investment adviser for failing to adequately disclose conflicts of interest when recommending to prospective and existing clients that they enroll in its fee-based advisory service.¹⁴ The SEC charged the adviser with failing to disclose to clients the financial incentives paid to its advisors through bonuses, salary increases, and certain promotions. The SEC’s order also found related policies and procedures violations. The adviser, without admitting or denying the allegations, agreed to pay a $19.5 million penalty to settle the charges, with the SEC’s order citing cooperation and remedial acts. (August 29, 2025)
  
  
• On the same date in August 2025, the SEC charged an investment adviser and its affiliated broker-dealer for inadequate disclosures and misrepresentations related to conflicts of interest.¹⁵ The SEC found that disclosures related to compensation arrangements and the capacity in which personnel were acting (i.e., whether acting as an investment adviser representative or a registered representative of a broker-dealer) were inadequate and misleading. The adviser’s representatives provided two types of services: specific investment advice and recommendations for a retirement plan platform. The SEC found that the adviser did not provide full and fair disclosure of the capacity in which its representatives were acting when providing advice or recommending that clients enroll in another fee-for-service offering. The adviser agreed to pay over $4 million in disgorgement (plus interest) and a $750,000 penalty, while the broker-dealer agreed to pay a $750,000 penalty. The SEC’s order cited the respondents’ remediation and cooperation. (August 29, 2025)

Fees and Expenses — Private Fund Advisers

Under Chair Gary Gensler and Chair Atkins, the SEC charged a number of private fund advisers for conflicts of interest in managing advised funds, including related to fees and expenses.

• In October 2024, the SEC charged an adviser relying on the venture capital adviser exemption and its sole member and manager of a single private venture capital fund client with breaching their fiduciary duties by transferring cash out of the fund’s bank account without notifying all investors. Furthermore, the SEC found that the adviser misled investors by providing financial statements for the fund representing that the cash was still in the funds’ control. The SEC also cited the adviser for taking an improper advance of management fees by paying itself advisory fees before they were due and without disclosure or authorization under the fund’s governing documents.¹⁶ To settle the charges, the member/manager agreed to pay a $10,000 penalty, with the SEC’s order citing the firm’s remedial efforts, including its voluntary retention of a compliance consultant. (October 7, 2024)
  
  
• In December 2024, the SEC filed a settled action against a private fund adviser and its owner alleging failure to disclose conflicts of interest arising from the owner’s familial and financial connections to the CEO of a portfolio company, shares of which were held by a private fund that the firm advised.¹⁷ Among other charges, the SEC alleged that the portfolio company’s CEO served as trustee for three trusts where the owner is a beneficiary, and the portfolio company’s CEO, in his capacity as trustee, entered into a series of transactions pursuant to which the trusts guaranteed repayment of a line of credit to the owner. To settle the charges, the firm agreed to a $550,000 penalty and the owner agreed to a $50,000 penalty. (December 20, 2024)
  
  
• In January 2025, the SEC charged two private fund managers and their sole owner with breaching their fiduciary duties in connection with expenses charged to two private funds, in addition to policies and procedures violations.¹⁸ Specifically, the SEC found that the respondents improperly charged certain types of expenses to the funds, including outsourced financial services, public relations services, certain legal fees of the manager, and personal credit card expenses, none of them permitted to fund expenses under the governing documents. The SEC also found that the managers failed to disclose conflicts of interest resulting from their expense reimbursements and the arrangements under which they were incentivized to charge the funds for expenses rather than pay the expenses themselves. The respondents agreed to pay, jointly and severally, civil money penalties of $250,000 to settle the charges, with the SEC order citing cooperation and remedial efforts undertaken. (January 10, 2025)
  
  
• In the first fee calculation-related enforcement action under Chair Atkins, the SEC charged a private fund adviser in August 2025 for violations concerning its calculation of credits and offsets to management fees.¹⁹ The SEC found that the adviser breached its fiduciary duty to the funds by engaging in two fee offset calculation practices related to its receipt of transaction fees from portfolio companies that created conflicts of interest that were not adequately disclosed to the funds or their limited partners and were inconsistent with the relevant fund’s limited partnership agreements, including by (i) failing to adequately disclose that the adviser received interest on deferred transaction fees from certain portfolio company investments without including those amounts in the corresponding fee offsets and (ii) improperly duplicating transaction fee reductions when calculating certain fee offsets for a portfolio company investment in which multiple funds invested. To settle the charges, the adviser agreed to pay a $175,000 civil penalty plus approximately $509,000 in disgorgement and prejudgment interest. (August 25, 2025)

Revenue Sharing

Continuing a several-years-old trend, the SEC brought a revenue-sharing enforcement action related to undisclosed compensation paid to affiliates. In July 2025, under the current administration, the SEC charged an adviser with breaching its fiduciary duty by failing to fully and fairly disclose the nature and extent of conflicts of interest associated with certain compensation paid to its affiliated broker-dealer by an unaffiliated clearing broker in connection with trade execution and account services, resulting in additional costs to clients, among other charges.²⁰ The SEC order noted the firm’s remedial efforts, and the firm agreed to a $1.75 million penalty to settle the charges. (July 11, 2025)

Cherry-picking

The SEC also continues to bring actions for cherry-picking, a practice of fraudulently allocating profitable trades to favored accounts at the expense of other advisory clients. These enforcement actions span the administrations.

• In December 2024, the SEC charged an investment adviser for compliance failures and misleading statements related to a cherry-picking scheme by one of its representatives who disproportionately allocated profitable trades to certain personal and family accounts the representative controlled while allocating unprofitable trades to accounts of unrelated advisory clients and placed certain clients in unsuitable securities contrary to their risk tolerance.²¹ Among other charges, the SEC found the firm failed to implement policies and procedures reasonably designed to prevent such violations and failed to reasonably supervise the representative. Without admitting or denying the findings, the firm agreed to pay a $375,000 penalty, with the SEC’s order noting its remedial efforts and cooperation. (December 12, 2024)
  
  
• In June 2025, the SEC charged a state-registered investment adviser and its principal for defrauding advisory clients through a cherry-picking scheme whereby the respondents disproportionately allocated profitable trades to the principal’s own accounts, his family members’ accounts, and the firm’s account and allocated unprofitable trades to 78 other advisory client accounts over an 18-month period.²² The respondents agreed to collectively pay over $250,000 to settle the charges, with the principal also agreeing to an associational bar. (June 3, 2025)

Misrepresentations, Omissions, and Inadequate Disclosures

In addition to undisclosed conflicts, the SEC brought a number of cases under the prior administration involving material misstatements and omissions to clients and investors as well as other inadequate disclosures. This trend has not continued so far since January 2025.

• As part of the prior administration’s priorities involving environmental, social, and governance (ESG) investing, in October 2024, the SEC charged an adviser with making misstatements and for compliance failures relating to the execution of an investment strategy that was marketed as incorporating ESG factors.²³ In particular, the SEC found that the adviser failed to adhere to its own investment criteria for ESG-marketed funds, misstating that the funds did not invest in companies involved in fossil fuels and tobacco when, in fact, it did. To settle the charges, the adviser agreed to a $4 million penalty. (October 21, 2024)
  
  
• Also as part of that ESG focus, in November 2024, the SEC filed a settled administrative action against an adviser related to statements concerning integration of ESG factors with respect to passive exchange-traded funds. The SEC also alleged related policies and procedures violations.²⁴ To settle the charges, the adviser agreed to pay a $17.5 million penalty, with the SEC’s order citing the adviser’s cooperation. (November 8, 2024)
  
  
• In January 2025, the SEC charged an adviser with making misleading statements related to capital gains distributions and tax consequences for retail investors who held target retirement funds in taxable accounts, as well as related policies and procedures violations.²⁵ The SEC’s order found, among other things, that the adviser announced a lowering of the minimum initial investment amount for the funds that caused a substantial number of retirement plan investors redeeming and switching to funds with lower expenses. To meet the redemption demand, the adviser was alleged to have had to sell underling assets with gains, resulting in historically larger capital gains distributions and tax liabilities on investors who did not switch. The adviser, without admitting or denying the allegations, agreed to pay over $106 million to be distributed to affected investors through a Fair Fund, deemed satisfied in part by a state settlement, with the SEC’s order noting remedial acts and cooperation. (January 17, 2025)

Hedge Clauses

In January, prior to the administration change, the SEC charged an adviser for attempting to limit its liability through its use of a “hedge clause.”²⁶ Although the SEC brought a couple of similar cases in its 2024 fiscal year, there have been no cases involving hedge clauses filed under the new administration to date. In the January order, the SEC alleged that the adviser required its clients to acknowledge that it was disclaiming its role in their investment decisions to invest in those funds and that it was not acting as their investment adviser in connection with their investment in those funds. The SEC found the statements contradicted the adviser’s brochure and could have led a client to believe incorrectly that the client had waived a nonwaivable cause of action against the adviser. The adviser agreed to a $100,000 penalty to settle the charges. (January 14, 2025)

Artificial Intelligence

Underscoring the Commission’s focus on artificial intelligence (AI), the SEC has continued to pursue actions against advisers for AI-related violations — in particular for “AI washing,” the practice of making false or misleading statements about a firm’s purported use of AI. For example, under the prior administration, the SEC filed a settled action against a registered investment adviser, as well as the parent entity and its owner/CEO, who also served as the adviser’s investment manager and CCO, and a parent entity board member for making false and misleading statements about an investment adviser’s claimed use of AI to perform automated trading for client accounts, among other misrepresentations.²⁷ To settle the charges, the individual respondents agreed to pay in aggregate $310,000 in civil penalties and the owner/CEO agreed to five-year industry bars and to pay over $213,610 in disgorgement plus prejudgment interest. (October 10, 2024). The new SEC administration has brought similar “AI-washing” cases, although outside of the adviser context.

Anti-Money-Laundering

During the fiscal year, prior to the administration change, the SEC brought a couple enforcement actions against advisers for anti-money laundering (AML) related conduct. For example, the SEC charged a private funds adviser with making misrepresentations related to its AML practices, including by stating it was voluntarily complying with AML due diligence laws when it did not always conduct the AML due diligence it described.²⁸ The adviser agreed to settle the SEC’s charges and pay a $150,000 civil penalty. (January 14, 2025)

The current administration has not brought any actions against investment advisers related to violations around AML programs. In addition, the compliance date for the FinCen AML rules for investment advisers adopted during the past administration has been postponed. As a result, it is currently unclear how the current administration will prioritize enforcement related to AML violations.

Litigated Actions

In the 2025 fiscal year, there were also several developments in litigated enforcement actions. Notably, under Chair Atkins’ leadership, the SEC has been voluntarily dismissing certain ongoing lawsuits, principally those involving cryptoasset-related conduct. In the asset management space, the SEC in July dismissed, with prejudice, its first-ever enforcement action enforcing the Liquidity Rule.²⁹ And, in April, the SEC dismissed a litigated action against a private fund adviser for compliance failures related to the handling of material, nonpublic information.³⁰ Still, the SEC has continued to pursue other litigated actions or engage in settlement discussions. For example, the SEC tried a case in Massachusetts against an investment adviser and his advisory firm involving fixed index annuities, not securities, which resulted in a split verdict where the SEC prevailed in some, but not all, charges against the defendants.³¹

In addition, the new administration has continued to file litigated actions against advisers.

• In April 2025, the SEC filed a complaint against an individual and his investment advisory firm for misconduct in connection with investing more than 25% of a registered fund’s assets in a single company over multiple years, causing $1.6 million in losses.³² The SEC alleged that the defendant had been ordered to stop this misconduct and that despite this order, the defendants allegedly continued their fraud by violating the 25% industry concentration limit and making misrepresentations about it. The litigation is ongoing.
  
  
• In June 2025, the SEC filed a litigated action against an advisory firm and its owner and managing member alleging they breached their fiduciary duties and defrauded advisory clients by making false and misleading fee disclosures and failing to disclose related conflicts.³³ The allegations included that the defendants said they would “take care to assure” that annual advisory fees would not exceed 2% of a client’s assets under management, when they did not in fact take such steps and charged numerous advisory clients more than 2%, and said they “may” offer hourly fee services when, in fact, the firm was providing such services without informing clients about those charges and without disclosing the financial conflicts of interest arising from their charging of hourly fees. The litigation is ongoing.

CCO Liability

Throughout its 2025 fiscal year, the SEC also brought several actions against CCOs, including related to gross supervision failures.

• In March 2025, the SEC filed settled charges against a private fund adviser and its former managing partner and CCO for breaching their fiduciary duties when they misused fund and portfolio company assets, among other charges.³⁴ Specifically, the order alleges that the firm’s former chief operating officer misused portfolio company debit cards to pay for personal expenses, and the CCO failed to reasonably supervise her despite red flags.³⁵ The SEC’s order cited remedial efforts and cooperation by the respondents, with the firm agreeing to a $235,000 penalty and the former CCO agreeing to a $80,000 penalty and one-year suspension from acting in a supervisory capacity. (March 7, 2025)
  
  
• In July 2025, the SEC brought an administrative action against the former CCO at an advisory firm, which had separately been charged in connection with fiduciary breaches,³⁶ for producing to Commission staff during the course of a compliance examination backdated documents purportedly documenting the firm’s annual review of its compliance policies and procedures.³⁷ To settle the charges, the respondent agreed to pay a $10,000 penalty. (July 11, 2025)
  
  
• In July 2025, the SEC charged a former CCO of a registered investment adviser for altering records and creating fictitious forms in response to an SEC examination of her employer.³⁸ Without admitting or denying the SEC’s findings, the respondent agreed to pay a civil penalty of $40,000 and to be barred for a three-year period from acting in a compliance capacity. (July 15, 2025)

Miscellaneous Compliance Failures

The SEC brought actions against investment advisers for compliance failures, including standalone compliance failures under the prior administration. Compliance failures are routinely identified during the course of registrant examinations. Chair Atkins has suggested that such actions are less likely to be pursued during his administration.

• In December 2024, the SEC charged a dually registered broker-dealer and investment adviser with policy deficiencies that resulted in failure to prevent and detect its financial advisors’ theft of investor funds.³⁹ The SEC’s order found that the firm failed to adopt and implement policies and procedures reasonably designed to prevent its financial advisers from using two forms of unauthorized third-party disbursements to misappropriate client funds, in addition to failing to have policies and procedures in place to prevent and detect misappropriation by its financial advisers using unauthorized cash wire transfers from client accounts. The SEC also found supervisory and systems failures. The order cited remedial efforts and cooperation, and the adviser agreed to pay $15 million and to undertake to engage an independent compliance consultant to settle the charges. (December 9, 2024)
  
  
• And, in January 2025, the SEC charged three investment advisory firms with standalone compliance violations relating to the firms’ cash sweep programs.⁴⁰ The SEC’s orders found that the firms failed to adopt and implement reasonably designed policies and procedures (1) to consider the best interests of clients when evaluating and selecting which cash sweep program options to make available to clients, including during periods of rising interest rates, and (2) concerning the duties of financial advisors in managing client cash in advisory accounts. The orders credited the firms’ cooperation and remedial efforts, including policy and procedures improvements made, with the advisers agreeing to pay $60 million collectively in civil penalties to settle the charges. (January 17, 2025). The then-two Republican SEC Commissioners dissented from the approval of these settlements, and we understand the new SEC administration has closed further investigations on this issue.

¹ See link here.
² Link here.
³ Link here.
⁴ Link here.
⁵ Link here.
⁶As a result of the pre- and post-January 2025 settlement differences, in May, FINRA indicated that it intends to modify the heightened supervision plans imposed as part of the pre-January 2025 settlements. See link here.
⁷ Link here.
⁸ Link here.
⁹ Link here.
¹⁰ Link here.
¹¹ Link here.
¹² Link here.
¹³ Link here.
¹⁴ Link here.
¹⁵ Link here.
¹⁶ Link here.
¹⁷ Link here.
¹⁸ Link here.
¹⁹ Link here. For additional information see the Sidley alert here.
²⁰ Link here.
²¹ Link here. The SEC separately filed a complaint against the representative, who consented to entry of judgment that includes a bar from associating with any broker, dealer, or investment adviser, orders disgorgement of $114,093, plus prejudgment interest thereon of $22,293.33 and a civil monetary penalty of $25,000. Link here.
²² Link here.
²³ Link here.
²⁴ Link here.
²⁵ Link here.
²⁶ Link here.
²⁷ Link here.
²⁸ Link here.
²⁹ Link here.
³⁰ Link here.
³¹ Link here.
³² Link here.
³³ Link here.
³⁴ Link here.
³⁵ The COO was separately charged. Link here.
³⁶ See footnote 20, supra.
³⁷ Link here. The SEC also separately charged the former president of the advisory firm in connection with the backdated documents, with the respondent agreeing to a $20,000 penalty to settle the charges. Link here.
³⁸ Link here.
³⁹ Link here.
⁴⁰ Links here and here.