The U.S. Securities and Exchange Commission sanctioned two investment advisory firms for failing to seek best execution on client trades placed with their in-house brokerage units.
A.R. Schmeidler & Co., the New York-based subsidiary of Hudson Valley Bank, agreed to pay more than $1 million to settle claims that it failed to re-evaluate whether it was providing advisory clients best execution when it negotiated with its clearing firm, the SEC said today in a statement. As a result of the failures, Schmeidler retained a greater share of commissions it received from clients, the SEC said.
The SEC also took action against Indianapolis-based Goelzer Investment Management and its owner, who agreed to pay $500,000 to resolve the agency’s claims that it misled investors about the process of selecting itself as the broker for advisory clients, according to the statement.
“These cases send a clear message to dually registered investment advisers and broker-dealers,” Andrew Ceresney, co-chief of the SEC’s enforcement division. “Investment advisers must carefully analyze whether their clients are obtaining the most beneficial terms reasonably available for their orders, particularly if those orders are executed through affiliated broker-dealers.”
Elliot Schimel, a spokesman for Schmeidler, said in an e-mailed statement that the company “has taken steps to address the issues that arose in this matter and looks forward to continuing to serve its clients.’
A phone call to Jeffrey Bailey, an attorney for Goelzer at Bose McKinney & Evans LLP, wasn’t immediately returned.