The Securities and Exchange Commission charged three investment advisory firms, including PNC Investment and Securities America Advisors, for breaching fiduciary duties to clients that alleged generated millions of dollars of improper fees.

PNC was also charged with improperly charging advisory fees to client accounts for periods when there was no assigned investment advisor representative.

The three firms, which settled the charges with the SEC without admitting the charges, “failed to disclose conflicts of interest and violated their duty to seek best execution by investing advisory clients in higher-cost mutual fund shares when lower-cost shares of the same funds were available, the SEC said. Collectively, the firms will pay almost $15 million, with more than $12 million going to harmed clients. 

In addition to PNC Investments and Securities America Advisors Inc., Geneos Wealth Management was charged with fiduciary duty and fund share violations. “These disclosure failures cause real harm to clients,” said C. Dabney O’Riordan, co-chief of the SEC’s Asset Management Unit.  

“We strongly encourage eligible firms to participate in the recently announced Share Class Selection Disclosure Initiative as part of an effort to stop these violations and return money to harmed investors as quickly as possible,” O’Riordan added. 

The SEC’s Share Class Selection Disclosure Initiative gives eligible advisors until June 12, 2018, to self-report similar misconduct and take advantage of the SEC Enforcement Division’s willingness to recommend more favorable settlement terms, including no civil penalties against the adviser.

The SEC’s orders also found that PNCI and Geneos failed to disclose the conflict of interest associated with compensation they received from third parties for investing clients in particular mutual funds. It also found that the three firms each violated provisions of the Investment Advisers Act of 1940, including an antifraud provision. 

Geneos was also charged for failing to identify its revised mutual fund selection disclosures as a “material change” in its 2017 disclosure brochure. 

Without admitting or denying the findings, the advisory firms each consented to a cease-and-desist order and a censure.  The orders require PNCI to pay $6,407,770 in disgorgement and prejudgment interest along with a $900,000 penalty. SAA must pay $5,053,448 in disgorgement and prejudgment interest along with a $775,000 penalty. Geneos must pay $1,558,121 in disgorgement and prejudgment interest along with a $250,000 penalty.