The SEC alleges Laguna Niguel, California-based TCFG Investment Advisors, LLC, TCFG affiliate broker-dealer TCFG Wealth Management, LLC, (TCFG Wealth) and Richard James Roberts – its president, CEO, and member of management – with making materially false and misleading statements and omissions related to ICT advisory client fee markings.
An SEC complaint was filed at the U.S. District Court. For the Central California District, TCFG, Roberts, and ICT violated their fiduciary duties to advisory clients from June 2014 to April 2020. Roberts and ICT allegedly disclosed to “ICT Wealth” that ICT could receive a portion of the fees it charges for ICT accounts. Roberts ordered that significant marking fees be paid to Wealth TCFG clients Wealth TCFG.
Roberts and TCFG allegedly failed to disclose the existence of markers but misled TCFG clients by claiming it was only imposed in a small number of cases. Roberts and TCFG allegedly knew or were recklessly and negligent for failing to know that ticket charges imposed by clearing and custody firms were marked up 60% of the time.
Roberts, who was a chief compliance officer at ICT, is accused of failing to create policies and procedures that could reasonably be used to avoid the disclosures and conflicts of interest that resulted from these practices. Roberts, according to the complaint used TCFG Wealth in an effort to prevent TCFG violations and Roberts’ violations.
This civil enforcement action involves fraudulent misconduct and breach of fiduciary duty by defendant Richard James Roberts and his investment advisory
firm, defendant TCFG Investment Advisor, LLC (“TCFG”). Roberts used his brokerdealer firm, defendant TCFG Wealth Management, LLC (“TCFG Wealth
Management”), to aid and abet this misconduct.
5. Between in or about January 2014 and in or about April 2020, Roberts and TCFG made materially false and misleading statements to TCFG’s advisory
clients (“TCFG clients”). The defendants defrauded the TCFG clients by falsely disclosing that TCFG Wealth Management “may” receive portions of the fees
charged to TCFG accounts by its third party clearing and custody firm (“Clearing Broker”) when, in fact, Roberts had directed Clearing Broker to charge TCFG clients an additional fee markup that was paid to TCFG Wealth Management. Roberts and TCFG further knew, or were reckless and negligent for not knowing, that the marked up portion of the fee was passed on to TCFG’s clients approximately 60 percent ofthe time. Roberts and TCFG made other materially false and misleading statements to TCFG’s clients regarding the fee markups and failed to disclose adequately the
Case 8:21-cv-01615 Document 1 Filed 09/30/21 Page 2 of 26 Page ID #:2 COMPLAINT 3 conflicts of interest they created for defendants.
6. Roberts used his positions as the chief operating officer, president, managing member and, at times, chief compliance officer of TCFG Wealth Management to substantially assist and further this fraudulent conduct and the violations of the fiduciary duties he and TCFG owed to TCFG’s clients.
7. Furthermore, as the chief compliance officer of TCFG, Roberts aided and abetted TCFG’s failure to implement the written policies and procedures that were reasonably designed to prevent the sorts of disclosure and conflict of interest violations that arose from TCFG Wealth Management charging and receiving these fee markups from TCFG clients.
8. By engaging in this conduct: (1) defendants Roberts and TCFG violated Sections 206(1) and 206(2) of the Advisers Act; (2) defendant TCFG violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder; (3) defendant Roberts, pursuant to Section 209(f) of the Advisers Act, aided and abetted TCFG’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder; and (4) TCFG Wealth Management, pursuant to Section 209(f) of the Advisers Act, aided and abetted Roberts’ and TCFG’s violations of Sections 206(1) and 206(2) of the Advisers Act.
9. The SEC seeks findings that the defendants committed these violations, permanent injunctions against all defendants, disgorgement with prejudgment interest against all defendants, and civil penalties against all defendants.
Roberts and TCFG are accused of violating Sections 206 (1), 206 (2) of Investment Advisers Act 40. TCFG Wealth is also accused of aiding in and abetting these violations. ICT is also accused of violating Section 206 (4) and Rule 206 (4) -7 of the Investment Advisers Act. Roberts is asked to help and comply with these violations. The complaint requests permanent injunctions, civil penalties, and indifference towards the interest of bias.
David M. Rosen and Gary Y. Leung from the Los Angeles Regional Office conducted the SEC investigation. Douglas M. Miller, Los Angeles Regional Office, will conduct the litigation. Amy Jane Longo will supervise. This material was referred from the Los Angeles Regional Office examination program to the examination performed by Shawn McEnnis and Chris Jung and supervised and monitored by Sang Lee.