Pittsburgh-based PNC Investments LLC, the brokerage and investment advisory arm of PNC Bank, agreed to pay $7.3 million to settle Securities and Exchange Commission charges that it breached its fiduciary duties to clients, generating millions of dollars in improper fees.
According to the SEC, PNC Investments and two other firms — Securities America Advisors Inc. and Geneos Wealth Management Inc. — failed to disclose conflicts of interest and invested clients in higher-cost mutual fund shares when lower-cost shares of the same funds were available.
Collectively, the firms will pay almost $15 million, with more than $12 million going to harmed clients, the agency said.
The SEC also found that PNC Investments and Geneos failed to disclose the conflict of interest associated with compensation they received from third parties for investing clients in particular mutual funds, and that PNCI improperly charged advisory fees to client accounts for periods when there was no assigned investment advisory representative.
The firms settled without admitting or denying the findings. PNC’s settlement includes $6.4 million in disgorgement and a $900,000 penalty.
“The SEC has indicated the disclosure issues described in its order are widespread across the industry and has launched a share class selection disclosure initiative to encourage self-reporting by other firms that used disclosure language similar to PNCI’s,” PNC spokeswoman Diane Zappas said in an email Friday.
“PNCI cooperated fully with the SEC,” she said. “We are pleased to put this matter behind us.”
In its news release Friday, the SEC said that eligible advisers have until June 12 to self-report similar misconduct and take advantage of more favorable settlement terms, including no civil penalties.
Patricia Sabatini: PSabatini@post-gazette.com; 412-263-3066.
First Published: April 6, 2018, 5:53 p.m.