MERIDEN — A national financial advisory firm headquartered on Preston Avenue was one of 79 firms nationwide ordered to return a total $125 million to clients following an investigation by the U.S. Securities and Exchange Commission into whether the firms tried to sell higher-fee mutual funds when lower-priced options were available.
Infinex Financial Group, 538 Preston Ave., agreed to pay $978,698 in restitution. The 79 firms did not admit or deny the findings, but agreed to be censured and to pay back the improperly disclosed fees, with interest.
In an email Wednesday, Brittany Chambers, Infinex’s director of marketing and communication, said the company had no comment.
In a cease-and-desist order to Infinex, Vanessa Countryman, the acting secretary of the SEC, wrote Infinex “purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible.”
The firm also failed to adequately disclose conflicts of interest related to the sale of higher-cost mutual fund share classes when a lower-cost share class was available, according to Countryman. The documents order Infinex to “cease and desist from committing or causing any violations and any future violations.”
Infinex reported regulatory assets under management of approximately $1,063,393,659 in 2018, according to the SEC order.
The violations occurred roughly from January 2014 to March 2016, according to the cease-and-desist order. Countryman’s order states the SEC reserves the right to levy further sanctions if it finds the firm provided any misleading information.
Infinex also has offices in California and Virginia. The firm, founded in 1993, is majority owned by a group of nearly 40 banks and operates under the slogan “by banks, for banks.”
The firm’s website calls itself a “broker-dealer powerhouse that prides itself on an unwavering commitment to serving the interests of our clients.”
Last year, Infinex was also fined $125,000 by Massachusetts securities regulators and was ordered to pay restitution to customers “who claimed they were sold investments at their local banks that they either did not ask for or did not understand,” according to the website Bank Investment Consultant.
The charges against the 79 firms stem from an SEC initiative launched in 2018 which incentivizes investment advisers to self-report violations.
The SEC enforcement division launched its Share Class Selection Disclosure Initiative in February 2018 to address ongoing concerns that, despite measures already in place, “investment advisers were not adequately disclosing or acting consistently with the disclosure, regarding conflicts of interest related to their mutual fund share class selection practices,” the SEC said in a press release.
Read more articles like this and help support local journalism by subscribing to the Record Journal.
Unlimited Digital Access just 99¢
Read more articles like this by subscribing to the Record Journal.
Unlimited Digital Access for just 99¢