An investment advisor in Westport, Conn., and his firm have been ordered by a federal court to pay more than $1.5 million for defrauding clients through undisclosed investment fees over a period of three years, the SEC announced.

The order was entered against Christopher E. McClure, a resident of Fairfield, Conn., and his firm, Westport Capital Markets LLC, in U.S. District Court for the District of Connecticut on Tuesday, the SEC said. The order held McClure and the firm liable for disgorgement of $632,953 and $187,807 in interest. Westport was also ordered to pay a civil penalty of $500,000, while McClure was ordered to pay a civil penalty of $200,000, the SEC said.

The judgments were the result of civil charges brought by the SEC, which led to a jury concluding in March 2020 that McClure and his firm committed the fraud, the SEC said. The fraudulent activity happened from about March 2012 to June 2015, according to the SEC.

The jury concluded that McClure and Westport Capital "defrauded their advisory clients by repeatedly purchasing securities that generated significant undisclosed compensation, thereby enriching themselves at their clients' expense," the SEC said. McClure is the president, CEO and sole owner of Westport Capital, the SEC said.

In its original complaint, the SEC said McClure and Westport Capital, a dually registered firm, received markups by selling securities from the firm's proprietary brokerage account to client accounts without the required client consent.

"Clients were deprived of key information they needed to evaluate Westport’s and McClure’s financial motives in buying these risky securities in their accounts," the complaint said.

The complaint also said Westport, in its capacity as a broker-dealer, accepted mutual fund 12b-1 fees without informing clients and despite the fact that the same funds had shares available without the fees.

"Through the conduct alleged herein, Westport and McClure breached the fiduciary duty that they owed to their investment advisory clients, by defrauding those clients, failing to make investment decisions in the best interest of those clients, and failing to disclose their conflicts of interest," the complaint said.

Westport Capital has been a registered investment advisor since 1996 and a registered broker-dealer since 1997.