Litigation Release No. 24985 / December 15, 2020
Securities and Exchange Commission v. CapWealth Advisors, LLC, Timothy J. Pagliara, and Timothy R. Murphy, Civil Action No. 3:20-cv-01064 (M.D. Tenn. filed December 11, 2020)
The Securities and Exchange Commission today charged Franklin, Tennessee-based registered investment adviser CapWealth Advisors, LLC, its principal, Timothy J. Pagliara, and an advisory representative, Timothy R. Murphy, in connection with their mutual fund share class selection practices.
The SEC s complaint alleges that, from at least June 2015 until June 2018, CapWealth, Pagliara and Murphy, failed to adequately disclose conflicts of interest arising from their selection of mutual fund share classes that charged 12b-1 fees, instead of lower-cost share classes of the same funds that were also available to clients. According to the complaint, those 12b-1 fees were paid to an affiliated broker-dealer under common ownership and control with CapWealth, which in