Investment Advisor Fraud Charges / $405k Disgorgement required.

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On 28 May 2019, the SEC (The Securities and Exchange Commission) charged investment adviser Stephen Brandon Anderson with fraud. The specific fraud was overcharging of advisory fees to his clients.

Anderson owned River Source Wealth Management, LLC, a registered investment adviser in North Carolina. River Source’s primary revenue was customer advisory fees. Customer agreements provided that those fees would be based on each customer’s assets under management. River Source is now out of business.

According to the SEC, in 2015 and 2016, Anderson overcharged his clients. The amounts were about 40% more than the agreed fees. Anderson also misled his clients about the reason he transferred their assets from River Source’s asset custodian, falsely stating that it was his decision when the asset custodian ended the relationship with River Source after noting irregular billing practices.
The SEC order charged that Anderson made material misstatements in reports filed with the SEC, including overstatement of assets under management by at least $34 million (18%) in 2015 and $61 million (35%) in 2016.

Among other relief, the Order obtained by the SEC prohibits Anderson from acting in a supervisory or compliance capacity or from charging advisory fees without supervision for at least three years. In addition, Anderson agreed to a cease-and-desist order and a censure, and agreed to pay disgorgement and prejudgment interest of $405,381 and a $100,000 penalty.

The SEC press release stated in part: “When advisors breach their duty to clients by misleading and overcharging them, they can expect the SEC will craft a package of remedies that will compensate harmed investors, provide additional safeguards for prospective investors, and deter similar conduct.”

Anthony M. Abraham, Esq., PC, has represented many investors who have claimed against Bankrupt and other estates for return of assets taken through fraud, including claims against Registered Investment Advisors. Anthony M. Abraham, Esq., PC is experienced in churning and unauthorized trading claims. If you were victimized and need help, please call us Toll Free at 1-877-430-4877 for a Free Consultation or email us at Anthony@AbrahamAttorneys.com.