A San Diego-based investment advisory firm, its CEO, chief compliance officer and an employee have been charged by the SEC with misleading investors and breaching their fiduciary duties to clients, the SEC announced Tuesday.

Total Wealth Management and its owner and CEO, Jacob Cooper, are charged with receiving kickbacks or “revenue sharing fees” for investments for clients without informing the clients, the SEC says.

The firm and Cooper failed to disclose to clients the conflicts of interest created by these fee payments as they recommended the underlying investments to clients and investors in the Altus family of funds. Total Wealth and Cooper also materially misrepresented the extent of the due diligence conducted on the investments they recommended, according to the charges. 

Total Wealth’s CCO Nathan McNamee and investment advisor representative Douglas Shoemaker also breached their fiduciary duties and defrauded clients by failing to disclose conflicts of interest and concealing the kickbacks they received from the investments they recommended, the SEC says.

“Investment advisors owe a fiduciary duty of utmost good faith and full and fair disclosure to their clients,” says Michele Wein Layne, director of the SEC’s Los Angeles regional office. “Total Wealth violated that duty with its pervasive practice of placing clients in funds holding risky investments while concealing the revenue sharing fees they paid themselves.”

In the order instituting administrative proceedings, the SEC alleges that Total Wealth and Cooper willfully violated the antifraud provisions of the federal securities laws, and McNamee and Shoemaker violated or aided and abetted violations of the antifraud provisions.