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The SEC won a trial against Penn.-based firm Ambassador Advisors after arguing the firm didn't disclose conflicts in its mutual fund share class selections. ....
CapWealth Plans to Fight SEC Charges Over Share Class Conflicts The SEC alleges CapWealth failed to disclose lower-cost share class options to its clients. But the RIA s founder calls the complaint a shameful exercise and an abuse of power.” The founder of a Tennessee firm plans to fight charges from the Securities and Exchange Commission that his firm failed to disclose conflicts arising from clients being invested in higher-cost mutual fund share classes for clients when lower-cost options were available. The SEC’s complaint against Franklin, Tenn.-based CapWealth Advisors is the latest in a number of filings following the Commission’s Share Class Selection Disclosure Initiative. ....
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 CapWealt ....