Two Advisory Firms, CEO Charged With Mutual Fund Share Class Disclosure Violations

The Securities and Exchange Commission today announced settled charges against two New York-based investment advisers and the CEO of one of the advisers who selected mutual fund share classes inconsistent with their disclosures to clients. The firms and the CEO will collectively pay more than $1.8 million, which will be returned to harmed investors. According to the SEC's orders, American Portfolios Advisers Inc., PPS Advisors Inc., and PPS's Chief Executive Officer and Chief Investment Officer, Lawrence Nicholas Passaretti, invested advisory clients in mutual fund share classes that paid 12b-1 fees to the firms' investment adviser representatives (IARs), even though less expensive share classes of the same funds were available.