Avantax Works with the SEC to Settle 1st Global Regulatory Matter
DALLAS – (December 20, 2021) – Avantax® reported today that it has entered into a settlement with the U.S. Securities and Exchange Commission (SEC) on behalf of 1st Global Advisors, Inc., which was acquired by Avantax’s parent in May 2019.
As part of the SEC’s broad review of wealth management firms related to mutual fund share class selection disclosures, referred to as the “Share Class Selection Disclosure Initiative,” 1st Global was among many financial services firms whose disclosures were examined. To date, the SEC has found that more than 100 financial services companies offering advisory services were inadequately disclosing to investors the compensation that was received in connection with 12b-1 fees and some mutual fund share classes.
In settling the 1st Global matter with the SEC, Avantax has agreed to return to investors approximately $12.4 million of revenue 1st Global received prior to being acquired in 2019 resulting from 12b-1 fees, certain no-transaction fee mutual funds and money market cash sweep products as well as an additional $2.5 million of interest. Avantax has also agreed to pay a civil monetary penalty of $2 million to address 1st Global’s disclosure failures between 2014 and 2019. Avantax has consented to the settlement without admitting or denying the findings set forth in the SEC’s Order.
“We were aware of the SEC’s Share Class Disclosure Initiative prior to acquiring 1st Global and booked a reserve related to a portion of this matter when the acquisition was completed. While we are disappointed that the SEC demanded a penalty based on conduct that occurred prior to our ownership of 1st Global, we are nonetheless pleased to have worked closely with the SEC to resolve this matter,” said Todd Mackay, President of Avantax Wealth Management®. “Our solid regulatory foundation includes a clear focus on bringing holistic financial planning and a diverse choice of investment products to allow our Financial Professionals to always act in the best interests of clients and provide assistance in preparation for their financial future.”
Avantax has in place policies and procedures so that all clients, including former 1st Global account holders addressed in the settlement, can be assured that current disclosures are comprehensive and accurate.
About Avantax Wealth Management®
Avantax Wealth Management® offers a tax-advantaged approach for comprehensive financial planning. Avantax’s Tax-Smart approach helps clients leverage taxes to create financial growth opportunities. Most financial companies treat taxes as an afterthought, or not at all, even though taxes are one of life’s most complex and costly expenses. Avantax technology, tax and wealth management insights are used by Avantax Financial Professionals to uncover and tailor opportunities across their clients’ financial lifecycles to help enable better long-term outcomes. The wealth management segment of Blucora, Inc. (NASDAQ: BCOR), which includes the Avantax Wealth Management® and Avantax Planning Partners℠ brands, had a collective $87 billion in total client assets as of Sept. 30, 2021. For more information, please visit us at www.avantax.com or on LinkedIn and Facebook.